Economic Data Weakness

Recent economic data suggest that the U.S. economy is encountering significant downward pressure. According to the latest indicators, both U.S. PMI figures have demonstrated a deceleration in economic activity. Specifically, the ISM Manufacturing PMI has fallen to 44.6, its lowest level since June 2023, thereby signaling a sustained contraction in manufacturing activity. In parallel, the Consumer Confidence Index has also decreased, which further highlights the fragility of economic growth.

Furthermore, although the recent nonfarm payroll report revealed some job growth, the increase was below market expectations. This discrepancy indicates that, while the labor market remains active, the pace of economic growth appears inadequate to sustain robust overall economic performance.

Performance of the U.S. Treasury Market

Fueled by expectations of forthcoming interest rate cuts, the U.S. Treasury market has experienced an upward trend. Specifically, the yield on the 10-year U.S. Treasury note recently increased to 3.846%, reflecting a rise from previous levels. Additionally, the 2-year Treasury yield fell by 7 basis points intraday; notably, the 2-year Treasury note has marked its fourth consecutive month of gains, representing the longest streak since 2021. Since late April, driven by anticipated rate cuts, the overall return on U.S. Treasuries has surpassed 6%.

In this context, the forthcoming nonfarm payroll report on Friday represents a crucial event for bond investors. Should the labor market exhibit continued resilience, it could potentially dampen expectations for rate cuts and weaken the upward momentum in Treasury yields. Currently, forecasts suggest that nonfarm payrolls for August will increase by 165,000, with the unemployment rate expected to decline to 4.2%, thereby indicating some improvement in the labor market.

Market Outlook

The observed weakening of the U.S. economy, coupled with the rise in Treasury yields, reflects a comprehensive response to current economic conditions and anticipated policy changes. As such, investors are advised to closely monitor fluctuations in economic data and Federal Reserve policy developments when making investment decisions. Given the market's inherent volatility and uncertainty, a cautious approach and robust risk management practices are recommended.

Investment Path

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1. Low Entry Requirements : No income review required, with an entry threshold of $800.
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4. High Security : High safety standards with relatively favorable risk-return profiles.