On Monday, four Federal Reserve officials expressed support for further interest rate cuts, with three favoring a gradual and slow approach. Only Mary Daly, President of the Federal Reserve Bank of San Francisco, believes that current monetary policy is "very tight," and that strong economic conditions should not be a barrier to rate cuts as long as inflation continues to cool.

The Federal Reserve is scheduled to hold a policy meeting on November 6th-7th. After this Friday, Fed officials will enter a quiet period and will not be allowed to publicly express views on monetary policy until the end of the meeting on the 7th.

Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City, said at a forum held by the Kansas City Association of Financial Analysts on Monday that rate cuts should be "gradual" and "prudent," especially considering the uncertainty of the ultimate policy goals and the need to avoid exacerbating financial market turmoil.

Lorie Logan, President of the Federal Reserve Bank of Dallas, also expressed a similar view earlier in the day at an event held by the Securities Industry and Financial Markets Association in New York. "If economic development goes as I expect, then a strategy of gradually reducing the policy interest rate to a more normal or neutral level can help us manage risks and achieve our goals," she said.

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Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, also supports a slow rate cut strategy unless the job market deteriorates sharply. He said at an event attended by the Chippewa Falls Regional Chamber of Commerce that, considering the strong resilience shown by the U.S. economy, the neutral interest rate should be higher than in the past. Schmid also mentioned this, saying that the neutral interest rate should be "far higher" than the level in the decade before the COVID-19 pandemic.

Unlike the above three who support a gradual and moderate rate cut, Daly said that for an economy with an inflation rate already close to 2%, the current interest rate is very tight, "I don't want to see the labor market slow down further."

"The Federal Reserve should also be open to the possibility that higher productivity could allow the U.S. economy to grow faster without raising inflation, allowing monetary authorities to continue cutting rates," she said in an interview with The Wall Street Journal.

Regarding the market's speculation that the Fed may pause rate cuts in November, Daly said, "I haven't seen any information suggesting that we won't continue to cut rates."

Among these four Fed officials, only Daly is a current member of the Federal Open Market Committee (FOMC), commonly referred to as a "voter." However, even without voting rights for the time being, other regional reserve bank presidents will attend the interest rate meeting and express their opinions.

Considering that both inflation and the labor market are cooling down, the Fed lowered the policy interest rate by 0.5 percentage points to a range of 4.75%-5.0% in September, starting the first rate cut in four and a half years at a higher-than-expected rate. The interest rate path "dot plot" released after the meeting showed that there may be another 50 basis points of rate cuts by the end of the year, that is, a 25 basis point rate cut in both November and December.However, a series of data released since the meeting so far indicates that the cooling of the labor market and the resilience of the US economy are not as weak as Federal Reserve officials had previously anticipated. This has sparked market speculation that the Fed may slow down the pace of rate cuts later on, and may even pause rate cuts in November or December.

As of around 14:50 Beijing time on Tuesday, the FedWatch tool of the Chicago Mercantile Exchange showed that the probability of a 25 basis point rate cut in November was 87.0%, while the probability of no rate cut was 13.0%, up 10 percentage points from a week ago.

On Monday, the yield on the 10-year US Treasury bond rose by 0.53% during the day, closing at 4.204%; the US dollar index surged by 0.5% to around 104, hitting a new high in over two months, with non-US currencies generally falling, the Japanese yen fell towards 151 against the US dollar, and the offshore Chinese yuan fell nearly 200 basis points against the US dollar.

In the short term, considering that the market has already made a relatively sufficient correction to the pricing of previous aggressive rate cuts, it is unlikely that US Treasury yields will rise significantly further. However, due to the strong resilience of the current US job market, the rise in oil prices driven by the escalation of the situation in the Middle East, and the increase in market inflation expectations, coupled with the increase in the US debt scale after the new fiscal year on October 1st, and the phased increase in US Treasury supply, it is expected that the 10-year US Treasury yield will continue to fluctuate at a high level above 4.0% in the short term.