Michael Krautzberger, Chief Investment Officer for Global Fixed Income at Allianz Investment, expects the Federal Reserve to cut interest rates by 25 basis points at its policy meeting on December 18, and to set the target range for the federal funds rate at 4.25-4.5%. From a strategic perspective, Allianz Investment tends to trade tactically on the yield curve, currently favoring short-term US bonds over European bond markets. They also see potential in a steepening US curve strategy, as supply is expected to remain high. Additionally, considering the potential US inflation risk in 2025, Allianz Investment also leans towards holding inflation-protected bonds. However, since the last Federal Reserve meeting in November, US economic data has remained relatively optimistic, and the results of the US elections also indicate a policy stance favorable to economic growth in 2025. The firm states that market pricing has shifted towards reflecting a future Federal Reserve policy that is not biased towards a dovish stance, with the current expectation that the federal funds rate will be only slightly below 4% by June 2025. Given the current US economic environment, the firm believes that the current pricing seems reasonable. Looking ahead to early 2025, Allianz Investment believes that the Federal Reserve may cautiously adjust policy towards neutrality and may pause rate cuts in January while assessing new data.