US10Y & T-Notes - Does The FED Have To Reduce Rates?

Last week played out to the tee, with sell side liquidity resting at 4.124% being breached causing bond prices to rise and dollar index to sell-off.

There is still room to the downside for the yields to fall to, namely 3.987% but I am aware that a short term retracement can play out this week,. For that reason, I am sitting on my hands throughout the week with a neutral position.

The poor US employment data fanned speculation of a 50 bp rate cut when the Fed meets on September 17. Even though more unwelcome news from the labor market is expected with next week's BLS annual benchmark revisions that could wipe out 500k-1 mln jobs (the adjustment last year was 818k lower), the risk of a large Fed cut may be exaggerated. An acceleration in headline CPI (September 11) may temper the enthusiasm for a large move.