US bond investors expect a shift in Fed policy, with the yield on 10-year US bonds potentially falling below 4%.

The Golden Finance reported that US bond investors are beginning to bet that the focus of the Fed's policy will shift from suppressing inflation to dealing with a slowing economy rise. In this expectation, US bonds have pumped for six consecutive trading days, and yields have fallen to the lowest level of the year. Morgan Stanley strategists said that if there is a slight change in the market's expectations for the Fed's policy, the yield on the 10-year US Treasury bonds could fall below 4%. Currently, traders have reinstated their expectations for two rate cuts by the Fed this year (25 basis points each) and are expected to further cut rates to around 3.65% next year. The bank believes that if the market expects rates to drop to 3.25%, the yield on the 10-year US Treasury bonds could fall below 4%. (FX678)