US Treasuries Resume Rally on Bets More Rate Cuts Are Coming

Group 1 - The Federal Reserve lowered its benchmark interest rate by 25 basis points and indicated two more reductions are expected this year due to pressure from the White House [1] - Following the interest rate cut, US Treasuries experienced their largest advance in over a week, with the yield on 10-year debt dropping to 4.05% and the two-year yield falling to 3.52% [2] - Market expectations suggest an 80% chance of another quarter-point cut next month and another in December, with a total of 120 basis points of easing priced in by the end of 2026 [5] Group 2 - Investors are optimistic about further monetary easing, with analysts predicting that inflation will prove temporary and expressing a preference for bonds [4] - Initial jobless claims are anticipated to decrease to 240,000, indicating potential improvements in the labor market [6] - Despite the rate cuts, some analysts caution that the reductions may not be as aggressive as anticipated, noting that only one FOMC member favored a larger cut [7]