Under the tide of Fed rate cuts, U.S. stocks are bullish to lead the way for the whole year, while U.S. bonds and the U.S. dollar are being neglected!
With the continuous rate cuts by the Federal Reserve, most respondents predict that the performance of the US stock market for the remaining time this year will surpass the government and corporate bonds market.
Guosen Securities: Will the Fed "stabilize the dollar" or "stabilize US bonds"? Global funds' views on US assets may change.
Guosen Securities stated that looking ahead, the Fed's decision-making may continue to be "tightening", and after a period of "stabilizing US bonds", it is not ruled out that "stabilizing the US dollar" may once again pressure the Fed to adjust its policy direction. These factors may influence the global perception of US assets.
Global Bonds Rush to Anticipate More Interest-Rate Cuts
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A large block trade appeared in the short-term interest rate market in the USA, setting a record for the largest scale in SOFR futures history.
Some analysis indicates that this trade may be a bet that the Fed's easing this year will be less than the current expectations.
The Federal Reserve aggressively cut interest rates, triggering a 're-inflation storm' in the US bond market.
The Federal Reserve's 50 basis point rate cut has initiated a new round of easing, however, this aggressive move has reignited inflation concerns in the US bonds market, with some investors worried that the relaxed financial environment may rekindle price pressures.
Will the Federal Reserve cut rates by another 50 basis points in November? The 2-year US bond yield hits a two-year low.
1. The US two-year Treasury bond yield fell further to its lowest level in over two years during the Asian session on Wednesday; 2. An indicator measuring consumer confidence slipped overnight on Tuesday, further enhancing expectations for a 50 basis point rate cut at the next Fed meeting.
Treasury Yields Fall on Declining U.S. Consumer Confidence -- Market Talk
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Rieder Says Recession Pricing in Bonds Was Overdone, Sees Attractive Yields After Rate Cut
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Treasury Yields Have Small Gains Ahead of U.S. Data -- Market Talk
US Stocks, Yields Higher as Fed Policymakers Weigh in
Manufacturing panic or preparing ahead? Vice President Pence warns: US debt may fall into a "death spiral"!
Republican vice presidential candidate J.D. Vance warned that if interest rates soar during his term, it could trigger a "death spiral" in the U.S. bonds market, ultimately potentially "destroying the country's finances"; In 2024, the U.S. government's spending on its massive debt interest is expected to surpass defense and medical insurance expenditures, becoming the second largest expenditure after social security.
Treasury Yields Nudge Higher as Investors Assess Growth Outlook
The Federal Reserve's "non-recessionary rate cut" means that traditional defensive strategies are no longer effective.
The traditional interest rate reduction trading strategy is to choose defensive stocks and high dividend stocks, but this time the Federal Reserve chose to cut interest rates significantly in a relatively loose financial environment, sending a signal to attack. Investors are shifting from defensive stocks to cyclical stocks and large cap stocks, investing in industries such as banks, technology, real estate, and autos.
The Fed's interest rate cut may not necessarily be bullish! Bank of America warns that the risk of a bubble resurgence, and recommends buying bonds and gold.
The excitement of the stock market intensified the bubble risk after the Fed cut interest rates, making bonds and gold an attractive tool to hedge against economic recession or rising inflation.
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Tianfeng Securities: The Federal Reserve cut interest rates by 50 basis points. How should we view the domestic bond market?
However, considering that the fundamentals and policies determine that the direction of interest rates has not changed, it seems unnecessary to take profit even if domestic interest rate cuts are implemented.