The U.S. bond market is currently experiencing a significant sell-off, comparable only to one instance in history under former Federal Reserve Chairman Alan Greenspan in 1995. Yields on two-year bonds have surged by 34 basis points since the Fed’s interest rate cut on September 18, the first in over a year.
This situation mirrors the 1995 period when Greenspan managed to cool the economy without triggering a recession. In prior rate-cutting cycles dating back to 1989, two-year bond yields typically dropped by 15 basis points on average within a month of the Fed’s rate cuts.
Global bonds have also declined this week as investors anticipate a slower pace of interest rate cuts.
