US Fixed Income Weekly：Strategy Updat

Investment Rating - The report does not explicitly provide an investment rating for the US Fixed Income market Core Insights - The bullish bias for the US front-end rates is no longer valid due to a terminal rate priced slightly below reasonable neutral estimates and improved lending standards indicating a lower likelihood of recession [3][7][10] - Term premia are structurally low, suggesting a stronger case for higher long-end rates from both data and valuation perspectives [3][10] - Recent data indicates a weaker labor market, with the private sector quit rate at 2.3%, historically consistent with an unemployment rate above 4.5% [3][4] - The Fed's Senior Loan Officer survey shows improvement, weakening the bullish bias for front-end rates [6][7] - The market is pricing a terminal rate slightly below 3.25%, requiring evidence of a recession for a significant rally in front-end rates [7][10] Summary by Sections Bond Market Strategy - The rationale for maintaining a bullish front-end bias has diminished due to recent repricing and data [3] - The case for being long the front-end is more nuanced compared to previous months, with improved lending standards and a stable labor market [6][10] Macro Portfolio Update - The report outlines various trades and their rationales, indicating a shift in strategy towards maintaining positions rather than entering new ones [11] Fed Liquidity and Money Market Monitor - Repo rates have shown increased firmness, with elevated demand for leverage contributing to higher rates [13] - The Fed's QT is expected to continue until reserve balances fall to around $3 trillion, with potential adjustments to mitigate upward pressure on overnight rates [14][18] Economics - The report anticipates stable inflation data, with expectations for CPI and PPI to show similar monthly gains [35][37] - The upcoming economic calendar includes significant data points that could influence Fed rate cut discussions [38][40] Fixed Income Charts of the Week - The report includes various charts that illustrate trends in the fixed income market, including the relationship between credit spreads and potential inter-meeting cuts [21][24]