Traders Lock In Fed Bets, Boosting Treasuries for Fourth Week

Core Viewpoint - The Federal Reserve is expected to cut interest rates next week, with a quarter-point cut fully priced in, leading to a focus on the pace of further easing for the remainder of the year [3]. Group 1: Treasury Market Dynamics - Treasuries are set to record a fourth consecutive weekly gain, with the 10-year note's yield dropping below 4% for the first time since April and the five-year note's yield nearing its lowest level of the year [2]. - A Bloomberg index of Treasuries showed a weekly gain of 0.45% through Thursday [2]. - The re-marketing of this week's Treasury note bond auctions and an anticipated rebound in corporate bond supply next week contributed to upward yield pressure [2]. Group 2: Economic Indicators and Expectations - Jobless claims numbers have overshadowed August inflation figures, which matched economists' estimates at 2.9% [5]. - Morgan Stanley economists predict interest rate cuts at four consecutive meetings through January due to slowing inflation and a weakening labor market [3]. - Money markets are currently assigning an 80% chance of two additional rate cuts by the end of the year [3]. Group 3: Investment Strategies and Market Sentiment - Amundi SA anticipates the Treasury yield curve to steepen, particularly at the short end, while other firms like Allianz and Pimco are more cautious and have reduced some curve risk following the recent rally [4].