Bezent calls on the Federal Reserve to cut interest rates by 50 basis points next month, prompting interest rate market traders to liquidate their positions in advance.

The overall mild US inflation report reinforced traders' bets on the upcoming rate cut by the Federal Reserve, with some believing the possibility of a larger rate cut is increasing. On Wednesday, the market further increased its bet on a rate cut by the Fed next month. The probability of a rate cut in September in the interest rate swap market has increased to around 95%. Yields on various US Treasury bonds rose across the board, with the 10-year yield dropping by 4 basis points to 4.25%. Treasury Secretary Besent called on the Fed to start a rate-cutting cycle at the September meeting. "We may enter a rate-cutting process, starting at 50 basis points in September," Besent said on Wednesday, "perhaps reducing rates by a total of 150 to 175 basis points." In recent weeks, investors have been increasing their long positions in interest rate swaps, options, and US Treasury bonds, betting that mild inflation and a weak labor market will prompt the Fed to start cutting rates.