Bond traders are still hesitant to take Warren Buffett’s advice and buy when others are selling.

The worst Treasury market rout in decades has pushed policy sensitive two-year yields to around 4.3%, a 15-year high, from just 0.7% at the end of December.

So it would seem a ripe time for dip buyers to dive in. But with the US Labor Department Thursday expected to report that key inflation gauges are holding near four-decade highs, investors are wary of further surprises that could drive the market to anticipate an even steeper course of rate hikes from the Federal Reserve.

“We are not ready to dip our toes in and take the other side,” following the brutal bond selloff this year, said Kelsey Berro, a fixed-income portfolio manager at JPMorgan Asset Management. “What we need to see is more visibility of the policy path. The front-end of the Treasury curve has scope to move higher.”

Those risks were underscored by Wednesday’s release of the Fed meeting minutes from September, which showed that many policy makers were more concerned about tightening policy too little than too much.

Markets have steadily ratcheted up estimates of where the Fed’s key policy rate will peak as the economy has been resilient in the face of the central bank’s most aggressive hiking in decades.

The risk that rate-hike expectations will continue to rise has driven some investors into Treasury bills due in one year or less, which have less downside risk from interest-rate increases. Bills due in October 2023 are currently yielding over 4.2%.

“The 12-month bill has the same yield as 2-years -- why would you take the duration risk?” said Ed Al-Hussainy, a rates strategist at Columbia Threadneedle Investments.

“Cash also provides you good optionality,” he said. “When things fall apart, you can pick up the pieces.”

This year’s sharp climb in Treasury yields has been led by the two-year note. While the selloff paused in mid-June, when yields started drawing back on speculation that a recession could spur an about face by the central bank, yields has since marched steadily higher as Fed officials adopted a consistently hawkish tone.

Until data enables the Fed to moderate the pace of its rate hikes, with another three-quarter point increase set for November, investors have tended to use front end rallies as opportunities to sell.

“Being short the front end has worked well this year and that trade still has momentum,” said George Goncalves, head of rate strategy at MUFG. “The market is still in the process of figuring out what the terminal rate will be and as you get closer to where the Fed stops, the distribution of outcomes broadens out and gets better.”

Still, some investors see reason to start wading back in, given that the steep jump in yields provides a large buffer against any future price declines. Moreover, while the Fed has already raised rates by 3 percentage points this year, the futures market is pricing in only about 1.5 percentage points more. That would put the upper bound of the Fed’s target rate at 4.75%.

“You are looking at a yield on a two year that is more than double its duration, and even if the Fed goes to 4.75% you will still do well over the next year,” said Jason Bloom, head of fixed income, alternatives, and ETF strategies at Invesco.

But Fed officials have repeatedly emphasized that they are committed to bringing down inflation that has been far more persistent than once expected. In the 2000 Treasury bear market, the 2-year Treasury didn’t rebound until after its yield crested above the peak Fed funds rate.

“People will feel a little more comfortable about the risk/reward of owning the front end if yields are near where the terminal rate ends,” said MUFG’s Goncalves.

This article was provided by Bloomberg News.