Short positions in the U.S. Treasury market have reached levels rarely seen in recent years, with traders betting on the Federal Reserve raising interest rates by 25 basis points tonight.

The U.S. 10-year government bond yield rose to its highest level since 2007 on Tuesday, while the 2-year yield also hit its 2024 peak. Market pricing indicates that Wall Street's expectation for a 25 basis point rate hike at the Federal Reserve's meeting tonight has exceeded 90%. Citi strategist David Bieber stated that the current short positioning is "tactically extreme." Bank of America strategists Meghan Swiber and Eleanor Xiao noted that shorts have accumulated across the entire yield curve, with asset managers mostly cutting long positions or increasing short positions. JPMorgan Chase's Treasury client survey showed that for the week ending September 14, client short positions jumped 10 percentage points week-over-week, with net long positions falling to their lowest in approximately four months, and the pace of adding shorts being the fastest since early 2025. Surging oil prices, signs of inflation rebound, and concerns about the fiscal deficit have collectively reinforced the market's judgment that the Federal Reserve must act.