After the rate cut, US Treasury bonds face large-scale selling. Is the United States expected to see another "soft landing" like in 1995?

The last time such a massive sell-off of U.S. Treasuries occurred as the Federal Reserve began cutting interest rates, then-Fed Chairman Greenspan was carefully planning a rare soft landing. Zhixin Finance App noted that since the Fed's first rate cut since 2020 on September 18, the two-year Treasury yield has risen by 34 basis points. In 1995, a similar rise in yields occurred when the Fed, led by Greenspan, successfully cooled the economy without causing a recession. In the rate-cutting cycle since 1989, one month after the Fed started cutting rates, the two-year Treasury yield on average fell by 15 basis points. Steven Zeng, interest rate strategist at Deutsche Bank, said that the rise in yields "reflects a reduced probability of an economic recession." "The data is quite strong. The Fed may slow down the pace of rate cuts." The latest U.S. bond sell-off mirrors the sell-off after the Fed's rate cut in 1995. The recent rise in yields indicates that the resilience of the U.S. economy and the vibrancy of the financial markets have limited Fed Chairman Powell's ability to significantly cut rates. The interest rate swap market shows that traders expect the Fed to cut rates by 128 basis points by September 2025, compared to about a month ago when the expected rate cut was 195 basis points. As investors weigh the possibility of a slowdown in rate cuts, global bond markets continued to decline this week, with U.S. Treasury total returns up only 1.7% this year as of Monday. Meanwhile, U.S. Treasury securities have risen by 4.3%. On Tuesday, the sell-off continued slightly, pushing the 10-year Treasury yield up by about 1 basis point, after rising by 11 basis points on Monday. The recent rise has pushed the benchmark yield to around 4.2%, higher than the 15-month low of 3.6% on September 17 (just the day before the Fed cut borrowing costs by half a basis point). Tuesday's trading activity indicated continued bearish sentiment, with a series of block trades in 10-year Treasury futures. In the options market, one trade aims for the 10-year Treasury yield to rise to around 4.75% when the options expire on November 22. In 1995, after a significant rate hike, the Fed cut rates only three times within six months, from 6% to 5.25%. Twelve months after the first rate cut that year, the 10-year Treasury yield jumped by over 100 basis points, while the two-year Treasury yield rose by 90 basis points The rise in yields this time also reflects growing concerns that the Republican Party may simultaneously control the White House and Congress in the November 5th election, which could exacerbate the federal deficit and inflation. Volatility has also intensified. The Intercontinental Exchange Bank of America MOVE Index, which tracks expected volatility in US Treasury bonds over the next month, has climbed to its highest level this year