[Bond market shorts are at extreme levels, betting on the Fed to deliver on interest rate hike expectations] September 16th, before the Federal Reserve announced its interest rate decision on Wednesday, bond market traders aggressively established bearish positions, betting that the sell-off in U.S. Treasury bonds that has pushed yields to more than a decade high will continue. The yield on the benchmark 10-year Treasury note rose to its highest level since 2007 on Tuesday as traders braced for the possibility of the Federal Reserve raising interest rates to combat inflation concerns. Meanwhile, 2-year yields rose to their highest levels since 2024. Market positions show that investors expect the bond market to weaken further and have limited willingness to buy on dips. A JPMorgan Chase U.S. Treasury client survey showed that spot market traders increased short bets in the past week at the fastest pace since early 2025. Investors also added to short positions in U.S. Treasury futures ahead of last week's stronger-than-expected inflation report, CME Group's open interest data showed. In the federal funds rate futures market, a bearish block trade could earn or lose $1.9 million for every 1 basis point move in the underlying contract. Swaps markets currently indicate expectations for about 50 basis points of Fed tightening for the rest of the year, including the September meeting.