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2026-09-15 21:42:08
[US Treasuries Supported by Supply and Interest Rate Hike Expectations] ⑴ US Treasuries rebounded after a brief pullback, but primary market supply and institutional selling limited gains, while potential buying remained. ⑵ During the Tokyo session, US Treasuries faced continued selling pressure due to the spillover effect of Japanese government bonds, with the 20-year Japanese bond auction, concerns about Japanese government spending, and cabinet changes all contributing to the pressure. ⑶ The 10-year US Treasury yield rose above 5%, attracting Asian buyers, but gains during the London session were offset by selling of European bonds and UK government bonds. ⑷ European bonds and UK government bonds were pressured by the absorption of supply from the auction of German 2-year and UK 15-year government bonds, with yields rising to approximately 17-year highs. ⑸ The rebound in US Treasuries from its lows was met with resistance before the futures market opened, with trend-following funds and hedge funds taking the opportunity to sell. ⑹ Buying returned after a sharp decline in New York manufacturing survey data. (7) Traders and short-term funds took advantage of the highs to establish short positions in today's approximately $13 billion 20-year Treasury bond re-issuance, and new investment-grade bond trading also triggered interest rate-locked-in selling. (8) Potential short-covering buying remains, which in turn limits a significant price decline; traders say actual funds are still buying at the 5% level for 10-year Treasury bonds. (9) Speculative and short-term funds are slightly defensive, but still hold short-covering positions, betting that the Fed will raise interest rates by 25 basis points at tomorrow's meeting. (10) The market expects a rate hike to bring a easing rebound, as it suggests the Fed is in anti-inflation mode. (11) Current federal funds futures indicate a 91% probability of a 25 basis point rate hike at Wednesday's meeting, and approximately 95% and 99% probabilities of further 25 basis point rate hikes in October and December, respectively. 12. Overall, US Treasuries are currently under pressure from supply and interest rate hike expectations, but bargain hunting and short covering provide support at the bottom. Going forward, attention will be focused on the Fed's decision and the subsequent path of interest rate hikes.
