The following article is sourced from: Shan Heng Securities Strategist  Zheng Kunlun Albert

Edited by: Well Link International Securities

Due to the recent stabilization of the global stock market (despite a panic sell-off on August 5, 2024), bond traders and investors have slightly changed their expectations for interest rate cuts in the United States.

A week ago, some bond traders and analysts believed that the U.S. central bank might make an emergency rate cut before the interest rate meeting in September. More bond traders believed that U.S. 

interest rates might fall to the range of 4.75% to 5.00% (while the current interest rate level is 5.25% to 5.50%).

However, now about 50% of traders believe that the rate cut in September may only be 0.25% (i.e., the interest rate level is 5.00% to 5.25%).

Looking forward, if we consider factors such as employment, consumer spending power, and inflation, the direction of U.S. interest rates may diverge slightly.

That being said, unless there is an unexpected situation, a moderate decrease in the inflation rate may support the possibility of a moderate rate cut.

If this is the case, then the U.S. interest rate level by the end of 2024 may be between 4.50% and 4.75%. The potential trend of declining U.S. interest rates may be beneficial to assets with higher dividend 

yields that involve more stable operational cash flows. Some Real Estate Investment Trusts (REITs) or utility assets listed in Hong Kong may be the beneficiaries.