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[Rate Cut Expectations Rise! Global Bond Markets React Strongly, German Bund Yields Fall] ⑴ Markets widely expect the Federal Reserve to cut interest rates later today, a prospect that has already led to a slight decline in eurozone government bond yields. The yield on the German 10-year government bond, the benchmark for eurozone bonds, fell 2 basis points to 2.68%. French and Italian government bonds moved in line with German bonds, reflecting the modest fluctuations in US Treasury yields. The US 10-year Treasury yield fell 1.5 basis points to 4.01%, while the interest rate-sensitive 2-year yield hovered around 3.50%. Both US and German 30-year bond yields fell about 2 basis points to 4.62% and 3.26%, respectively. ⑵ Germany's 30-year bond auction yielded positive results, with the bid-to-cover ratio improving compared to the previous auction, demonstrating continued strong demand for this type of bond despite recent pressure on long-term bonds. Traders have fully priced in a 25 basis point rate cut from the Federal Reserve. Comments from Fed Chairman Powell and updated economic and interest rate forecasts from policymakers will be key market focus. Analysts believe that an expected rate decision could boost US Treasury yields and the dollar in a market reaction of "buying expectations and selling facts." (3) Institutions point out that the recent dollar weakness and falling US Treasury yields indicate that much of the expected impact has been priced in by the market. So far this month, the dollar has fallen nearly 1% against other major currencies. If the Fed unexpectedly delivers a dovish signal, US Treasuries could outperform German Bunds as investors have adjusted their expectations for ECB easing. Money markets are pricing in nearly 70 basis points of cumulative Fed rate cuts by the end of 2026, while also anticipating a 25 basis point cut from the ECB over the medium term. (4) Latest data showed that eurozone consumer inflation was 0.3% in August, in line with expectations. Furthermore, UK inflation remained at 3.8% in August, the highest among major developed economies. While the Bank of England is expected to keep interest rates unchanged on Thursday, the Norwegian Central Bank, which will hold a meeting on the same day, is expected to cut interest rates by 25 basis points. Institutional analysts believe that the latest data has not significantly affected the possibility of further interest rate cuts by the Bank of England this year. The yield on the UK 10-year government bond fell 2 basis points to 4.62%.