Treasury Bets Face Reversal Risk From Hawkish Fed Signals

Key facts

• Bullish bets in US Treasuries are vulnerable to a sharp reversal.
• The Federal Reserve's upcoming monetary policy meeting is a key focus.
• Hawkish signals could indicate multiple rate hikes in the coming months.

Bullish bets in US Treasuries are vulnerable to a sharp reversal if the Federal Reserve takes a more aggressive stance at its upcoming monetary policy meeting. The Federal Reserve appears certain to keep its key policy rate on hold Wednesday, with next week's midterm elections eliminating any chance of a surprise. However, there are a number of signals to watch for that could point to multiple rate hikes in the months ahead. The first of these could come with the updated policy statement at 2 p.m.