Sina US Stock Exchange Beijing time 25th Bloomberg reported that looking at the layout of hedge funds and other large speculators in short-term US Treasuries, they may think that another rate rise by the Federal Reserve may be imminent.

The speculators last week pushed the two-year bond futures clearance order to a record high of 274213 contracts, according to the Commodity Futures Trading Commission (CFTC). 2-year notes are the most sensitive to Fed interest rate expectations.If the Fed were more hawkish, speculators would profit.

That's why it's puzzling: the increase comes just before the Federal Reserve announced its interest rate decision on Wednesday. A growing number of strategists expect Fed officials to ease expectations of further tightening. Us inflation has fallen from the fed's 2 per cent target, so traders are still calculating that policy makers will continue to raise interest rates or wait for prices to rebound.

"the idea in the market is that inflation will continue to disappoint the Fed; to be honest, most people think the Fed is expected to hold back in the second half of the year," said Charles Comiskey, head of U.S. Treasury trading at Bank of Nova Scotia of Canada in New York. "it doesn't make sense to short two-year bonds at this time. "

Based on the currently effective Fed funds rate and the forward overnight index swap rate, the market expects the Fed to raise interest rates by about 43% at the end of the year. By contrast, the probability reflected on July 7 was 62 per cent, the day after the two-year bond yield hit 1.43 per cent, the highest level since 2008. The yield on the two-year note was 1.36% on Monday.