Interest rate cuts have become a certainty❗️❗️❗️
Currently, the global market has moved beyond the expectation of a confirmed interest rate cut in December and is gradually 'swaying' under the uncertainty of future interest rate paths, putting pressure on the bond market!
On the first trading day of this week, it is clear that the market is already trading under the path of 'confirming the interest rate cut, but uncertain about future interest rates'.
Due to the support for rate cuts from key Fed policymakers, but with significant internal disputes regarding future interest rates, the financial market temporarily assumes that high interest rates will continue, and inflation pressures persist.
Under this expectation, the dollar has slightly strengthened, and gold is under short-term pressure. If high interest rates are maintained for most of 2026, it will threaten the increase in gold prices.
Meanwhile, the future interest rate path (2026) is not sufficiently clear, inflation pressures remain, and multiple factors such as global bond market sell-offs and expectations of yen interest rate hikes are pushing up the yields on 10-year and 30-year U.S. Treasuries.
The more sensitive 1-year U.S. Treasury yield has increased, indicating that the 1-hour bond market yield has already completed its expected trading for the December rate cut, shifting towards the future interest rate path.
After the U.S. stock market opened, technology stocks led the rise but then turned volatile. Currently, the Nasdaq and S&P have turned to a downward trend, with the VIX index rising to 16.61. Although it has not entered a panic phase, the short-term rise in the VIX index means that the risk market has entered a tense stage.
Overall summary:
Under the global bond market sell-off, U.S. Treasury yields are relatively high, and the U.S. economy’s resilience has led to an increase in short-term dollar demand, resulting in a rebound in the index.
Looking at the bond market situation, it has already completed expectations for a December rate cut, so the risk market should also complete its movements. The focus of market trading will not be on the December rate cut, but rather on the subsequent dot plot and the expectations for the 2026 rate cut path brought by Powell's speech.
If the expectations are unfavorable, the risk market will face short-term pressure after the rate cut. It is important to note that based on the current performance of the global market, if Tuesday's job openings data is favorable, it could alleviate market concerns about the uncertainty of future interest rates. However, if the data cannot continue to drive the market, then market sentiment will not be too optimistic before the rate cut is realized.