Fed Rate Cut Next Week "All Set"! 10-Year Treasury Yield Falls Below 4% Mark

　　The 10-year U.S. Treasury yield, often referred to as the "anchor for global asset pricing," briefly fell below the closely watched 4% mark on Thursday (September 11), hitting a five-month low. Reports on the U.S. Consumer Price Index (CPI) and initial jobless claims that day reinforced the view that the current U.S. economic environment is suitable for the Federal Reserve to implement its first rate cut in nine months next week.

　　Yields on other maturities of U.S. Treasuries were mixed. Among them, the 2-year Treasury yield rose 0.19 basis points to 3.539%, the 5-year Treasury yield fell 0.35 basis points to 3.595%, and the 30-year Treasury yield fell 4.15 basis points to 4.654%.

　　Data released by the U.S. Labor Department that day showed that the U.S. CPI rose 0.4% month-on-month in August, slightly higher than the expected 0.3%, with a 0.2% increase in July. Compared to the same period last year, the CPI rose 2.9% year-on-year in August, slightly higher than July's 2.7%.

　　Nate Thooft, Chief Investment Officer of Equities and Multi-Asset Solutions at Manulife Investment Management, said, "Thankfully, the data wasn't far off from expectations. So, I think in many ways, the market sees that things aren't worse, which is a relief."

　　Alongside the CPI data, the performance of employment data—the other aspect of the Fed's dual mandate—also drew attention from industry insiders, as the latest initial jobless claims data unexpectedly far exceeded expectations. The data showed that in the week ending September 6, initial jobless claims increased by 27,000 to 263,000, the highest level since October 2021. The median forecast from economists was only 235,000.

　　Interest rate futures pricing also reflects bets on the Fed cutting rates by 25 basis points three times in a row, meaning that starting from next week's meeting, the Fed will cut rates by 25 basis points at each of the remaining meetings this year.