According to a news report on November 25 (Editor: Xiaoxiang), as Thanksgiving approaches, this week the american financial market is about to enter a short trading week: the stock market and treasury bonds will be closed all day on Thursday; on Friday, they will close early.

However, from the news perspective, this short trading week may not be calm: the Federal Reserve's November meeting minutes and their favorite inflation indicator, the PCE price index, will be released this Tuesday and Wednesday local time, which may cause more market fluctuations at the end of November.

Currently, industry insiders generally expect that the latest inflation data to be released this week may show that price pressures in the usa remain stubborn, which will reinforce the Federal Reserve's cautious attitude towards future rate cuts.

The median forecast from a survey of economists indicates that the PCE price index for October in the usa may increase by 2.3% year-on-year, up from 2.1% in September; excluding food and energy, the core PCE price index for October is expected to rise by 2.8% year-on-year—this would be the largest year-on-year increase since April.

The report is also expected to reveal that household spending in the usa at the beginning of the fourth quarter has been strong, with steady income growth. Adjusted for price changes, personal spending is expected to increase by 0.4% month-on-month, down from 0.5% last month. Personal income is expected to increase by 0.3% month-on-month, unchanged from the previous value.

Although Federal Reserve policymakers will receive another set of inflation data—November CPI—before their next interest rate meeting on December 17-18, the data for this week will be the last monthly indicator before the meeting concerning the PCE data they prefer. Currently, as Trump continues to promise to advance tax cuts and tariff increases following his victory, Wall Street is generally worried that inflation pressures in the usa will increase again in the coming year.

This has also led to a continued reduction in expectations for Federal Reserve rate cuts among industry insiders. According to the CME's FedWatch tool, market traders currently expect a 50.9% probability of a 25 basis point rate cut next month, with a 49.1% probability of no cut, both nearly equal.

The Federal Reserve will also release the minutes of the November meeting on Tuesday local time (3 a.m. Beijing time on Wednesday). Although the decision to cut rates by 25 basis points earlier this month was not unexpected, the details regarding inflation data, economic outlook, and future rate cuts in the latest meeting minutes are still expected to be of significant interest.

Economists at HSBC pointed out in a report that the Federal Reserve's November meeting minutes may also show discussions among some decision-makers regarding the economic impact that the results of the U.S. elections could bring.

Looking at the recent trends in the U.S. Treasury market, after experiencing two consecutive months of sell-offs, U.S. Treasury prices finally showed some signs of stabilization last week, primarily due to the current high yields attracting some investors back.

Taking the 10-year U.S. Treasury yield, which is considered the 'anchor of global asset pricing,' as an example, after breaking 4.5% on November 15, a wave of large-scale purchases temporarily halted the rise of this yield, which has not breached this level again since then. The 10-year U.S. Treasury yield closed at 4.4% last Friday, down 3 basis points from the previous week's close.

Fund managers at the Pacific Investment Management Company (PIMCO) stated that when U.S. Treasury yields exceed 4%, they are quite attractive. Since Treasury yields generally move in the opposite direction of stock prices, they are beginning to serve their traditional role as a hedge against declines in the stock market.

Erin Browne, Managing Director and Multi-Asset Portfolio Manager at PIMCO, said in an interview that U.S. Treasuries are 'assets with very low volatility and high return on investment.' She added that if the 10-year U.S. Treasury yield rises to 5%, she 'would be very interested in buying more aggressively.'

Felipe Villarroel, a portfolio manager at the asset management company TwentyFour Asset Management, believes the fair value of the 10-year Treasury is between 4.25% and 4.5%, but he added that given 'the recent inflation situation has not worsened dramatically' and investors still cannot confirm whether Trump's policies will drive prices up, 'volatility will continue to exist.'

Editor / jayden