Fed rate hike probability reaches 94%, US Treasury market sees extreme short bets

TechFlow reports that on September 16, according to Jin10 data, the current market probability of the Federal Reserve raising interest rates at its Wednesday policy meeting has reached 94%. Historical data shows that when market expectations rise to this level, the Fed has consistently opted for a rate hike.

As a result, the U.S. Treasury market has accumulated extreme short positions, with shorts covering the entire yield curve. Due to a lack of buy-the-dip capital, traders are broadly betting that the Fed will fulfill the rate hike expectations. If it keeps interest rates unchanged on Wednesday, it will be viewed as the largest policy surprise since 1994.