The Fed's dovish stance has overwhelmed the hawkish stance, with interest rate cut expectations rising in the coming days.

On November 26, investors are increasing their bets that Fed policymakers will cut interest rates again at next month's rate decision. This move eliminates the doubts from last week that leaned towards no rate cut and paves the way for the rise in U.S. Treasury bonds. The open interest in futures contracts tied to the Fed's benchmark interest rate surged in the past three trading days, with January contracts setting daily trading volume records last week. Currently, market pricing shows that the probability of a 25 basis point rate cut at the Fed's December meeting is about 80%, up from just 30% a few days ago. The shift in interest rate expectations began with the delayed release of September employment data last week, which painted a mixed economic picture. Subsequently, New York Fed President Williams stated last Friday that he envisions “room for cuts in the near term” against the backdrop of a weak labor market, further reinforcing this expectation. “There are serious divisions within the Fed, but it seems the doves have overwhelmed the hawks,” said Tracy Chen, portfolio manager at Brandywine Global Investment Management. (Jin10)