Interest rate cut expectations crush short sellers! Two-year U.S. Treasury yield is approaching a three-month low

The yield on U.S. short-term Treasury bonds is nearing a three-month low, reflecting the market's widespread expectation that the Federal Reserve will cut interest rates next month. The two-year Treasury yield hovered around 3.67% on Thursday, down nearly 30 basis points since the end of July, primarily due to weaker-than-expected non-farm payroll data. Market sentiment has significantly reversed, with the probability of a rate cut now exceeding 50%. Treasury Secretary Becerra supports a rate cut, suggesting a possible 50 basis point reduction in December. Deutsche Bank strategists indicate that the market's perception of the magnitude of rate cuts is changing, making a 25 basis point cut feasible