The Federal Reserve is expected to "stay put" this week, with bond investors closely monitoring the "traffic light" for interest rate cuts

According to the Zhitong Finance APP, U.S. Treasury investors, who have been severely impacted by the trade and fiscal policies of the Donald Trump administration, will gain insight this week into how these policies affect the Federal Reserve's interest rate decisions. Although Federal Reserve Chairman Jerome Powell and his colleagues are expected to keep the benchmark interest rate unchanged at the June 17-18 meeting, traders will closely analyze economic and interest rate forecast data in an attempt to discern how policymakers are responding to the current uncertainty.

As of last Friday's market close, trading pricing indicated an approximately 80% probability of a rate cut by the Federal Reserve in September, while expectations for a cumulative rate cut of less than 50 basis points by the end of the year have been fully absorbed. The rise in the U.S. Treasury market last week eased on Friday due to escalating geopolitical tensions driving oil prices higher.

According to CME's "FedWatch," the probability of the Federal Reserve maintaining interest rates in June is 96.9%, with a 3.1% probability of a 25 basis point cut. The probability of the Federal Reserve keeping rates unchanged in July is 77.9%, with a cumulative 25 basis point cut probability of 21.5% and a cumulative 50 basis point cut probability of 0.6%. The probability of the Federal Reserve maintaining rates unchanged until September is 27.5%, with cumulative cut probabilities of 25 basis points and 50 basis points at 58% and 14.1%, respectively.

Last week, interest rate futures linked to the Federal Reserve's policy rate reflected a growing market bet on consecutive rate cuts starting in September. Data from the U.S. Department of Labor showed that weekly initial jobless claims remained at relatively high levels, indicating that the labor market is gradually cooling, further reinforcing investors' expectations for easing policies.

Meanwhile, another government report indicated that the U.S. Producer Price Index (PPI) rose 2.6% year-on-year in May, in line with economists' expectations, suggesting that inflationary pressures have not intensified further.

Last week, JPMorgan CEO Jamie Dimon issued a warning that if the U.S. government fails to curb the ever-expanding federal deficit, the bond market could face a "collapse" risk. This statement sparked widespread discussion and varied reactions across sectors.

U.S. Treasury Secretary Scott Bancen responded that Dimon has issued similar warnings in the past, but those warnings did not materialize. Some observers believe that Dimon is signaling to JPMorgan employees to remain vigilant about the risks of bond investments and to avoid suffering losses due to excessive risk-taking