On August 15th, Fidelity published an article pointing out that central banks (especially the Federal Reserve) are expected to cut interest rates in the last few months of 2024, which will inevitably impact the fixed income market. Therefore, Fidelity International believes that bond investors seeking returns need to reevaluate their fixed income asset allocations to adjust their portfolios according to the changing policy environment. When trying to predict interest rate trends, central banks have to look both forward and backward. Interest rate decisions have a lag, which means policy officials need to adjust borrowing costs 6 to 12 months before potential changes in economic conditions. Therefore, in a comprehensive evaluation of interest rate trends, it is necessary to analyze forward-looking indicators. However, Fidelity expects the Federal Reserve's rate cut before the end of 2024 to be less than 50 basis points, which does not reflect the economic growth risks based on labor market and consumer data. In the United States, inflation seems to be under control at the moment, and the optimistic consumer-related data in June 2024 also supports rate cut expectations, so the focus of the Federal Reserve is shifting to the labor market. However, it has been proven that the nonfarm payroll data has become increasingly unreliable in reflecting the employment situation, mainly because the response rate has dropped to the lowest level in 30 years, and it is the government and education sectors that inflated the nonfarm data. Fidelity believes that the nonfarm data does not reflect the massive layoffs in small and medium-sized enterprises. Such trends often spread to the overall US economy, and if the economy is really hit, it may prompt the Federal Reserve to take action faster than expected, possibly accelerating the current expected rate cut cycle. US consumers remain the pillar driving short and medium-term economic growth. However, at this stage, Fidelity believes spending may still slow down. Lower-income consumers have been under pressure for some time, and homelessness and poverty rates are skyrocketing. In addition, the number of people working two jobs to supplement their income is also increasing. Therefore, in attempting to accurately evaluate the health of the US economy, Fidelity focuses on middle to high-income earners, who are a crucial part of discretionary spending statistics. Fidelity's analysis shows signs of further pressure on consumer spending. The latest consumer confidence survey report shows that despite the overall positive growth of the US economy, consumer confidence has fallen to the level corresponding to an economic recession. Fidelity advises that in this environment, bond investors should seek investment opportunities while maintaining forward-looking deployment, for example, investing in US long-duration assets for returns, and seizing yield opportunities through diversified investment portfolios. The performance of the US corporate bond market in 2024 has been unexpectedly strong, and according to Fidelity's assessment of the risks facing the US economy in the next six months, government bond yields still have value, especially in medium to long-term bonds (5 to 7 years). Furthermore, in regions that have already started rate cuts, such as the eurozone and Canada, investors can establish technical long-duration positions. With the US presidential election approaching, it is expected that the US market will become more volatile, and investors can also consider global income strategies outside of the US dollar bond market. Fidelity states that the European Central Bank has already started rate cuts, and Fidelity has found bond investment opportunities in Europe, which can provide substantial returns and diversify global income strategies. Finally, because interest rate changes may affect currency valuations, and then affect the attractiveness of various fixed income strategies, currency hedging strategies remain crucial.