Fed officials have different opinions on hawkish and dovish stances, and Powell's speech this week is highly anticipated.

Several Federal Reserve officials spoke on the U.S. economy last week. Permanent voting member and Federal Reserve Board member Bowman has been extremely hawkish in speeches on June 25 and June 28. He repeatedly expressed doubts about the appropriate time to lower interest rates, emphasized that he would continue to consider carefully changes in future policy stances, and warned that lowering interest rates too early or too quickly could lead to an inflation rebound. He said that "further interest rate hikes in the future cannot be ruled out." Through speeches of officials such as Bowman, Cleveland Fed President Mester, and San Francisco Fed President Daly, who are more dovish, it is pointed out that although they recognize that it is appropriate to keep interest rates at a high level for a longer period of time if inflation declines more slowly than expected, they also believe that high interest rates are putting considerable pressure on total demand, and that it is appropriate to lower interest rates at some point after inflation drops rapidly or the labor market cools down. Although Bowman's hawkish attitude stands out among a group of Federal Reserve officials to some extent, it does not necessarily represent a turning point in the overall attitude of the Fed. To find traces of the Fed's true attitude towards interest rate cuts, we still need to look at remarks from Fed Chair Powell.

Other Federal Reserve officials such as Bowman, Cleveland Fed President Mester, and San Francisco Fed President Daly lean more toward the dovish side. Although they recognize that it is appropriate to keep interest rates at a higher level for a longer time period if inflation declines more slowly than expected, they are also of the opinion that high interest rates are putting significant pressure on total demand, and that it is appropriate to cut interest rates at some point after inflation drops rapidly or the labor market cools down.

Although Bowman's hawkish stance is somewhat "standing out from the crowd" among the various Federal Reserve officials, it does not necessarily represent a turning point in the overall attitude of the Fed. Finding traces of the Fed's true attitude towards interest rate cuts still requires looking at remarks from Fed Chair Powell.

This week, heavyweight figures Powell and Williams gave speeches. Analysis suggests that Powell's remarks at the June FOMC press conference leaned toward controlling inflation risks, and indicated that the timing of interest rate cuts will depend on data. Given the current resilience of the U.S. economy and a labor market that has cooled but is not weak, if the Fed chooses to cut interest rates in July, then it may face the problem of insufficient inflation data to give the Fed greater confidence; if it chooses to cut interest rates in September or November, then it may affect the Fed's independence. It is expected that Powell will continue to emphasize "exchanging time for space," waiting for more good inflation data.

As the Fed's expectations for interest rate cuts grow, market expectations for interest rate cuts are increasing. Under these circumstances, the conditions that are favorable to U.S. bonds have matured. Bond ETFs are expected to have outstanding performance.

The U.S. May personal consumption expenditure price index (PCE) rose 2.6% year-on-year, the lowest level this year, in line with expectations, according to data released on June 28th. After the data was released, bets increased that the Fed would cut interest rates in September and again in December. Futures traders linked to Fed policy rates now see a 68% chance of a rate cut at the September meeting, up from around 64% previously.

The next important data point to evaluate the Fed's future policy path is the June non-farm payroll data, which is expected to reflect a further cool-down of the U.S. employment market.

The U.S. June non-farm payroll report will be released at 20:30 Beijing time on Friday and is expected to reflect a further cooling of the U.S. job market. Bloomberg data shows that the report is expected to show that the U.S. added 188,000 non-farm jobs last month, with the unemployment rate remaining steady at 4%. In May, the U.S. added 272,000 new jobs, with the unemployment rate rising slightly to 4%.

Under the expectation of interest rate cuts, which U.S. bond ETFs should investors pay attention to?

Comprehensive analysis of the statements of Federal Reserve officials from the beginning of the year to the present shows that despite fluctuations during this period, market expectations for a shift in Fed policy have gradually increased and expectations for rate cuts have intensified. At present, the market believes that the conditions for favoring US bonds may have matured, and US bond ETFs are expected to perform well.

Rachana Mehta, co-head of fixed income at Maybank Asset Management, believes that 10-year Treasury yields are expected to fluctuate in a range of 4.2% to 4.5%, and when they are close to the high point of this range, it will be a good time to buy.

Desmond Fu, investment portfolio manager at Western Asset Management, said that the most important thing now is that the price difference between market expectations and Fed pricing has narrowed, effectively reducing volatility.

It is worth mentioning that as the Fed and investors' views on the number of expected interest rate cuts this year are starting to converge, the volatility of the $27 trillion U.S. Treasury bond market has also cooled off from recent highs. The ICE BofA MOVE index, compiled by Bank of America, which tracks expected volatility of U.S. Treasury bonds based on options, is hovering around 98, lower than the high of 121 in April. For ordinary investors, investing in bond ETFs is a more convenient choice. The biggest advantage of bond ETFs is that investors can avoid the trouble of selecting targets and directly hold a basket of low-cost bonds to achieve the goal of diversified investment.

It is worth mentioning that as the Fed and investors' views on the number of expected interest rate cuts this year are starting to converge, the volatility of the $27 trillion U.S. Treasury bond market has also cooled off from recent highs. The ICE BofA MOVE index, compiled by Bank of America, which tracks expected volatility of U.S. Treasury bonds based on options, is hovering around 98, lower than the high of 121 in April. For ordinary investors, investing in bond ETFs is a more convenient choice. The biggest advantage of bond ETFs is that investors can avoid the trouble of selecting targets and directly hold a basket of low-cost bonds to achieve the goal of diversified investment.

It is worth mentioning that as the Fed and investors' views on the number of expected interest rate cuts this year begin to converge, the volatility of the US Treasury market, which has a market size of up to 27 trillion dollars, has also fallen from its recent high. The ICE BofA MOVE index compiled by Bank of America, which tracks the expected volatility of US Treasury bonds based on options, is currently hovering around 98, below the high point of 121 set in April. For ordinary investors, investing in US Treasury ETFs is a more convenient choice. The biggest advantage of US Treasury ETFs is that investors can save themselves the trouble of choosing symbols and directly hold a basket of bonds at low cost, achieving the goal of diversified investment.

BlackRock, which has $54 billion in funds under management and is the world's largest fund manager, announced that it would launch the world's first-dollar denominated physical gold ETF in Australia called BLACKROCK ISHARES PHYSICAL GOLD ETF.$iShares 20+ Year Treasury Bond ETF (TLT.US)$Last Monday (June 24), the ETF saw its largest single-day inflow of capital since it was founded in 2002. The fund attracted $2.7 billion in inflows that day. Although the fund has accumulated losses of nearly 3% this year, net inflows of capital from the beginning of the year have reached about $4.4 billion. This phenomenon occurred as investors began adjusting their mid-year investment portfolios. Traders generally bet that the Federal Reserve will cut interest rates by more than 100 basis points over the next 9 months, or at least 4 cuts of 25 basis points each, as economic growth slows down.

In addition,$SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL.US)$, $iShares U.S. Treasury Bond ETF (GOVT.US)$, $iShares 7-10 Year Treasury Bond ETF (IEF.US)$, $Short-Treasury Bond Ishares (SHV.US)$and other US bond ETFs are worth paying attention to.

Edited by Jeffrey