Bonds
Treasuries Plunge Like It’s 1995 as Traders See Soft Landing
- Two-year yields have jumped 34 basis points since Fed meeting
- Resilient economy limits room for rate cuts as election looms
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The last time US government bonds sold off this much as the Federal Reserve started cutting interest rates, Alan Greenspan was orchestrating a rare soft landing.
Two-year yields have climbed 34 basis points since the Fed reduced rates on Sept. 18 for the first time since 2020. Yields rose similarly in 1995, when the Fed — led by Greenspan — managed to cool the economy without causing a recession. In prior rate cutting cycles going back to 1989, two-year yields on average fell 15 basis points one month after the Fed started slashing rates.