Wash fails to become a "rate cut pusher"? JPMorgan bets on US economic resilience to suppress short-term debt.

J.P. Morgan's strategy team recommends shorting two-year US Treasury bonds as a tactical trade, citing the continued strong outlook for the US economy, which will make it difficult for the Federal Reserve to cut interest rates significantly. The strategy team led by Jay Barry wrote in a report, "The fundamental strength of the US economy remains strong, and once Kevin Warsh is confirmed and takes over as Fed chair, it will be difficult for him to lead the Federal Open Market Committee according to his own wishes." The release of the key US inflation report this Friday is expected to provide new clues for the Fed's subsequent actions. Any signal of slowing price pressures could stimulate demand for short-term government bonds sensitive to policy. The yield on US Treasuries has fluctuated sharply this week, mainly due to the sell-off in tech stocks and strong employment data how Warsh, the next Fed chair nominee by Trump, will handle policy has become a hot topic in the market. Currently, traders expect the Fed to cut interest rates by 25 basis points in July, and again before the end of the year. Before the release of stronger-than-expected employment data earlier this week, the market was almost fully pricing in a rate cut in June. During the Asian trading session on Friday, the two-year US Treasury yield rose slightly by 2 basis points to 3.47%, after falling by about 5 basis points in the previous trading day. There are also market participants who hold different views. Hedge fund manager David Einhorn has bet that under Warsh's leadership, the Fed's rate cuts will be "far above" current market expectations. The Greenlight Capital co-founder stated that he has bought overnight indexed swaps, anticipating a rebound in this instrument if the Fed cuts rates significantly. J.P. Morgan forecasts that factors such as the fade of early-year price pressures and the end of the government shutdown will drive the US core CPI, excluding food and energy, to rise by a strong 0.39% on a month-on-month basis in January. Economists' average expectation is a rise of 0.31%, in line with market consensus. "We believe that short-term yields are unlikely to decline significantly from their current levels," J.P. Morgan strategists summarized in the report.