The divergence in the Fed's interest rate cut path has widened, and the meeting minutes are expected to clarify the direction.

The data fog has exacerbated uncertainty surrounding Federal Reserve policy, as many Fed officials expressed concerns about sticky inflation and remained cautious about further rate cuts. This has also kept U.S. Treasury yields within a relatively narrow range, as traders await new catalysts to change market pricing. “We’ve lacked guidance from top-tier economic data for far too long, and it’s difficult to form a highly confident judgment about the current state of the U.S. economy until we start seeing the data,” said Michael Lorizio, head of U.S. interest rates and mortgage trading at Manulife Investment Management. The upcoming minutes of the Fed’s October meeting may further reveal how many policymakers might oppose a rate cut in December. “When there seemed to be a lot of disagreement before, the summary information from today’s minutes could help further shape market expectations for the December meeting,” Lorizio said. (Jinshi)