Leveraged funds boosted overall shorts on U.S. bond futures to a fresh record in the week to May 2.
Investors are snapping up sovereign bonds amid warnings the U.S. economy is spiraling into a downturn.
Hedge funds will be vindicated if the Fed prevails in its view that borrowing costs need to keep marching higher.
DoubleLine Capital founder Jeff Gundlach sees the Fed cutting rates "substantially" soon.
Traders are signaling they are certain the Fed will lower rates by July to at least undo this week's increase.
U.S. bonds have been whiplashed this month as a banking crisis calls the Fed's path into question.
Fixed-income assets have gone into reverse as central banks stand by interest rate increases.
Investors are readying for the Fed's latest policy decision this week.
Many closely-watched spreads in the Treasury market have already flipped below zero.
The rapid central-banking pivot from stimulus to tightening is placing strains on economies around the world.
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