Despite the typically subdued trading volumes in August, the underlying trend in the U.S. Treasury (UST) market reveals a consistent buying preference, particularly among Asian Real Money accounts (large institutional investors) and banks. These institutions have been actively purchasing longer-term bonds (20 years and beyond), even in the face of a slight bull-steepening in the market. This buying behavior is driven by a global economic backdrop of moderate, though not catastrophic, growth. Central banks have responded to this environment with a shift toward monetary easing rather than aggressive rate cuts aimed at staving off an imminent recession. The Riksbank, for instance, recently implemented a 25 basis point rate cut, with the potential for additional cuts later this year.
Interest Rates and Federal Reserve Expectations
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