U.S. Treasury investors expect the Fed's policy to shift, and the 10-year Treasury yield may fall below 4%

US bond investors are starting to bet that the focus of the Fed's policy will shift from suppressing inflation to addressing economic growth slowdown. In this expectation, US bonds have risen for six consecutive trading days, with yields falling to the lowest level of the year.

Morgan Stanley strategists said that if the market slightly changes its expectations for the Fed's policy, the yield on 10-year US bonds could fall below 4%. Currently, traders have resumed their expectations for two interest rate cuts by the Fed this year (25 basis points each), and they expect further rate cuts to around 3.65% next year. The bank believes that if market expectations for interest rates fall to 3.25%, the yield on 10-year US bonds could fall below 4%. (FXStreet)