The bond market is increasingly expecting that the selloff in US Treasuries, which has pushed bond yields to their highest level in nearly 20 years, will continue, after investors rushed to open short positions in bonds ahead of the results of the US central bank's meeting tonight. The 10-year US Treasury yield climbed to its highest level since 2007 on Tuesday, September 15, rising 5 basis points to 5.04% before closing at 5.00% in New York trading, while the 2-year yield surged to its highest level since 2024. Investors are rapidly adding to short positions in US Treasury futures at the fastest pace since the start of 2025, according to JPMorgan's survey of US Treasury market clients and open interest data from CME Group, which showed block trades betting on lower bond prices in the policy rate futures market, with the potential to gain or lose 1.9 million dollars for every 1 basis point move in the underlying contract. Meanwhile, the swaps market reflects expectations that the Fed will raise interest rates by a total of about 0.50% over the remainder of the year, and Wall Street estimates there is a more than 90% chance the Fed will raise rates for the first time since 2023. Jason Thomas, head of global research and investment strategy at Carlyle, told Bloomberg TV that the Fed is facing enormous pressure to raise interest rates by 0.25% and needs to act seriously to maintain price stability.
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CME Group Inc
JPMorgan Chase & Co