Did Federal Reserve Chairman Jerome Powell anticipate that just one month after his September announcement of a rate cut, U.S. Treasury bonds would plummet in a "rate hike scenario"? Yes, the Federal Reserve did cut rates by 50 basis points last month, but the 10-year U.S. Treasury yield, known as the "anchor of global asset pricing," has actually risen by more than 50 basis points over the past month and a half.

This scene has led many to recall the round of Federal Reserve rate cuts under Alan Greenspan's tenure in 1995.

Many investors may not have much memory of what happened nearly 30 years ago. But in fact, similar to what Powell is trying to achieve now, the last time U.S. Treasury bonds were heavily sold off as the Federal Reserve began cutting rates, Greenspan was planning a rare "soft landing."

Since the Federal Reserve announced its first rate cut in four years on September 18, the two-year U.S. Treasury yield has risen by 34 basis points. In 1995, a similar increase in U.S. Treasury yields occurred during the same period, when the Federal Reserve led by Greenspan successfully cooled the economy without triggering a recession.

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From July 1995 to January 1996, the Federal Reserve initiated a six-month rate cut, totaling three cuts of 75 basis points, with the policy rate ceiling dropping from 6% to 5.25%. In the history of the Federal Reserve, this was a very short and small rate cut, but the result was undoubtedly successful. The Federal Reserve's operations helped the U.S. economy regain stability and successfully avoided inflation "taking off." During the rate cut process, the PCE inflation rate hardly exceeded 2.3%, maintaining relative stability.

Due to the successful economic soft landing under the rate cut, after the first rate cut that year, the 10-year U.S. Treasury yield jumped by more than 100 basis points within 12 months, while the two-year U.S. Treasury yield rose by 90 basis points.

Currently, some of the logic behind the U.S. Treasury sell-off seems to have quite a few similarities with that year.

Deutsche Bank interest rate strategist Steven Zeng said, "The rise in yields reflects a reduction in the probability of an economic recession risk. The data is quite strong. The Federal Reserve may slow down the pace of rate cuts."

The latest pullback in yields indicates that the resilience of the U.S. economy and the prosperity of the financial market are limiting the space for Federal Reserve Chairman Powell to further actively cut rates. Interest rate swap trading shows that traders currently expect the Federal Reserve to cut rates by only 128 basis points before September 2025, while a month ago the pricing was for another 195 basis points.

As investors weigh the possibility of slowing rate cuts, U.S. Treasury bonds have been leading a continuous decline in the global bond market over the past few weeks. This round of market movements has raised the benchmark 10-year U.S. Treasury yield from a 15-month low of 3.6% the day before the Federal Reserve's September decision to about 4.2%. At the same time, the latest trading movements on Tuesday indicate that the market sentiment remains bearish, with a series of large transactions in 10-year Treasury futures.In the options market, there is a trade with the objective that by the expiration date of November 22nd, the yield on the 10-year Treasury note will rise to around 4.75%...

Of course, despite the trajectory of U.S. Treasury bonds, Powell seems to be replicating the glorious record of a "soft landing" from the Greenspan era. However, whether Powell's current direction can be as successful as it was at that time may still be questionable.

A clear difference lies in the actions of the Federal Reserve itself. Compared to Greenspan's "calm and composed" steady rate cuts of 25 basis points at the time, Powell's initial "impetuous" move of cutting by 50 basis points at once has raised doubts and criticism from many industry insiders, as numerous evidence suggests that the U.S. economy may still be overheating.

On the other hand, the more critical crux of the issue is obviously inflation. This time, the rise in U.S. Treasury yields also reflects growing concerns about the possibility of increasing the federal deficit and reigniting inflation.

If the "soft landing" after rate cuts in the Greenspan era has been turned into a "no landing" by the "impetuous" Federal Reserve in today's context, then for the global market, it may not necessarily be good news either.