The Federal Reserve's interest rate cut debate: Can U.S. debt achieve another success depends on the face of non-farmers this week?

The debate in the US Treasury market over how much the Federal Reserve will cut interest rates in the future is heating up with the release of a series of key economic data. Bond traders are betting that the Fed will cut interest rates twice next year, one more than the Fed has hinted at, and if market expectations are correct, it will set the stage for another strong performance for US Treasuries, which are headed for their best year since 2020. George Catrambone, head of fixed income at DWS Americas, said: "The direction of interest rates will depend on the direction of the labour market, so I will only focus on Tuesday's non-farm payroll data." However, WisdomTree's Kevin Flanagan said: "This week's jobs report is likely to be light-weight as the government shutdown complicates data collection, which shifts his focus to early next month, ahead of the Fed's January 28 policy decision." Traders, on the other hand, believe the Fed will end its easing cycle at around 3.2 per cent, according to swap market proxy indicators. If the Fed remains largely inactive in the face of stubborn inflation, that would suggest more range-bound Treasury bonds in the future. (Golden Ten)