According to the 资讯财经APP, the Federal Reserve's 50 basis point rate cut has started a new round of easing, however, this aggressive move has reignited inflation concerns in the American bond market, with some investors worried that the relaxed financial environment may reignite price pressures.

The long-term US bond yields most sensitive to inflation prospects have risen to the highest level since early September, with some investors concerned that the Fed's shift from inflation suppression to protecting the job market may cause a rebound in price pressure.

Cayla Seder, a multi-asset strategist at CCK Holdings, said: "I believe that if we are in a rate-cut environment, and the Fed indicates its desire to provide support before the job market weakens, there will be doubts about how quickly inflation can reach the Fed's target." She expects that as the market bets on stronger economic growth and inflation, long-term US bond yields will continue to rise.

Last week, Federal Reserve Chairman Powell said that the 50 basis point rate cut was a "reset" of Fed policy, aiming to move sustainably towards the Fed's 2% inflation target while keeping the job market strong.

However, the Fed's repeated emphasis on the economy's resilience has intensified concerns that the path to rate cuts may be slow and bumpy. Fed officials' rate forecasts also suggest a slower pace of rate cuts than market expectations.

Last Wednesday, after the Federal Reserve announced a rate cut, the future ten-year inflation expectations measured by Treasury Inflation-Protected Securities (TIPS) have risen slightly, with the 10-year break-even inflation rate reaching 2.16% last Thursday, the highest level since early August. On Monday, the index briefly hit a new high of 2.167%.

Last Thursday, following the announcement of the Federal Reserve interest rate decision, the 10-year TIPS auction was well received by investors, with non-dealers absorbing 93.4% of the $17 billion in Treasury bond sales, the highest level since January. However, according to LSEG's data, funds flowing into US dollar inflation-linked bonds turned negative in the week ending Monday.

BMO Capital Markets interest rate strategist stated in a report last week, "Investors are once again concerned about the specter of re-inflation." Ruffer fund manager Matt Smith stated that he has been increasing inflation protection for his investment portfolio in the past few days and weeks.

Many market participants still vividly remember the dovish turn of the Federal Reserve in December last year, followed by unexpected increases in inflation and employment in the subsequent months leading to selling pressure.

Despite interest rates remaining at their highest levels in over 20 years, Goldman Sachs' American Financial Conditions Index, measuring credit availability in the economy, has eased this year. The day after the Federal Reserve's decision, the index fell to the lowest level since May 2022.

Brendan Murphy, Head of North American Fixed Income at Insight Investment, said: "We believe inflation will remain relatively modest...but the larger the Fed's rate cuts, the more you need to question that."

"Goldman Sachs Put Options"

Inflation measured by the Consumer Price Index (CPI) in the United States has sharply declined over the past two years. In August, it was 2.5%, well below the peak of over 9.1% in June 2022, the highest in more than 40 years.

Federal Reserve Board member Wall last week said recent data convinced him that the Fed needs to cut interest rates faster, as the inflation rate may fall below the 2% target.

However, for the same information, Federal Reserve Board member Bowman believed that a larger rate cut might be interpreted as declaring victory over inflation too early. At last week's meeting, she opposed a 50 basis point cut, opting instead for a 25 basis point reduction.

If inflation continues to recede, despite the revaluation of the pace of rate cuts causing fluctuations, the outlook for bonds may still remain optimistic.

However, some doubt whether the Fed's aggressive rate cuts are premature, as the inflation rate is still above target and recent monthly data suggests lingering price pressures.

Economists at Bank of America Securities mentioned the so-called "Fed Put" in a report last week - that is, the level of the S&P 500 index at which the Fed is pressured to intervene in the market. They indicated that given the economic resilience and the stock market at historic highs, the "Powell Put" came too early.

"A more aggressive easing cycle could make achieving the 2% target more difficult," they stated.