With the astonishing resilience shown by the US labor market and consumers, the Federal Reserve is abandoning the idea of quickly pushing forward interest rate cuts. The European Central Bank, on the other hand, is maintaining a path of further interest rate cuts amid economic slowdown. "We are positioning for US Treasuries to underperform and European government bonds to outperform," said Roger Hallam, Global Head of Rates at Vanguard, which manages nearly $10 trillion in assets. "We are monitoring the relative growth differentials between the US and Europe, and we believe the outlook for the US is relatively optimistic, while Europe's macro outlook appears more subdued." Traders expect the European Central Bank to cut rates by around 136 basis points by September 2025, while the Federal Reserve is expected to cut rates by 122 basis points. "This is a trade we still believe in," said Hallam