2-year US Treasury bond yield plummeted significantly, while the possibility of a larger interest rate cut remains uncertain.

FXStreet September 18th, Jinshi data, the market has completely digested the expectation of a 25 basis point rate cut by the Federal Reserve this week. At that time, the Federal Reserve is expected to start a rate cut cycle, and whether the possibility of a larger rate cut will be seen as a coin toss. If officials ultimately choose a more moderate 25 basis point rate cut, then all the enthusiasm for rate cuts will bring traders a huge risk of losses. Although the Federal Reserve will hold its most uncertain meeting since 2007, the number of futures traders betting on a substantial rate cut has hit a record. George Carter Amborn, head of the fixed income department at DWS Americas, said: “The Federal Reserve will have to strike some balance in this area, as their pricing for the size of the rate cut is different from the market’s.” The policy-sensitive 2-year Treasury yield has dropped sharply from nearly 5% at the end of April to close to 3.5% this week, the lowest level since September 2022, as calls for a rate cut have increased against the backdrop of easing price pressures and signs of weakness in the labor market.