Traders skeptical about Fed rate cuts in September

For much of this year, bond investors were confident that the US Federal Reserve (Fed) would resume its rate-cutting cycle by September. However, that certainty has wavered. Traders are closely focused on the upcoming release of US inflation data, as the reports could shape investor expectations about the Fed's next moves, Bloomberg says.

Strong US jobs data in early July made traders doubt whether the Fed would lower borrowing costs in the current month. However, investors still believe there’s a 70% chance of a rate cut in September, the news agency notes.

Fed Chair Jerome Powell stated that policymakers must first evaluate the impact of US import tariffs on the economy before lowering interest rates.

Meanwhile, analysts polled by Bloomberg expect the American consumer price index accelerated to 2.9% in June. This inflationary pressure could force the Fed to rethink its policy soon and push Treasury yields higher.