Expectations of interest rate cuts are strong on the eve of the release of non-farm data, and US bond traders are looking forward to a rate cut in September.

After more data showed a slowdown in the US job market, US bond traders are expecting the Federal Reserve to start cutting interest rates earlier. They have adjusted their first rate cut estimate from October to September, and they expect at least one more rate cut by the end of the year. On Friday, the US will release non-farm payroll data for May, and an increase in initial claims for unemployment benefits has led to repricing of interest rate swap contracts linked to Fed meeting dates. The US bond market also rebounded, with investors reacting to weak employment indicators following the largest single-day surge in two months on Wednesday.