Monetary Policy Outlook - The Federal Reserve is expected to maintain the policy rate at 4.25%-4.5% during the July meeting, despite external pressures for a rate cut[2] - Economic data since the June FOMC meeting has shown resilience, with June non-farm payrolls exceeding expectations and the July PMI rising to 54.6[2][4] - The market currently prices a 70% probability of a 25 basis point rate cut in September[4][13] Future Rate Cut Expectations - The Fed is likely to implement two rate cuts between September and December, contingent on economic data from July and August[5] - The decision to cut rates will depend on the performance of non-farm payrolls and CPI data in the upcoming months[5] - There is a risk of a stronger-than-expected economic performance, which could lead to a rollback of rate cut expectations[5] Inflation and Employment Insights - Inflationary pressures are anticipated in the third quarter due to tariffs, although the transmission of these tariffs to inflation may be weaker than previously expected[5] - The job market shows signs of cooling, with private sector employment remaining weak and job openings declining[5][17] Treasury Issuance and Market Risks - The U.S. Treasury is set to announce its debt issuance plans, which may include an increase in short-term bills and potentially longer-term notes, impacting long-term interest rates[5] - The Treasury's plan to raise the debt ceiling by $5 trillion may lead to increased issuance of government bonds, creating duration risk in the market[5]