Capital Economics: The market overestimates the Fed's rate cut outlook, and U.S. short-term interest rates face rising risks.

On August 20, Kevin Thozet, a member of the Caixin Macro Investment Committee, stated in a report that the short-term interest rates in the U.S. face rising risks, and the market is overly confident about the Fed's interest rate cut prospects. The U.S. money market has priced in at least two rate cuts this year, reflecting market expectations that the U.S. economy and inflation will show further signs of slowdown. Thozet stated: "Considering the resilience of the U.S. economy, policy uncertainty, and the persistence of inflationary pressures, we believe this expectation is too high." The trend of long-term U.S. Treasury yields is more balanced. Currently, the 10-year U.S. Treasury yield at 4.300% is expected to fluctuate within a range of about 50 basis points around the current level. (Jin10)