The rally continued on Tuesday, with the yield on the two-year Treasury bond falling to about 3.85 per cent from more than 5 per cent at the end of April. The gains over the past four months are the longest streak of gains since 2021. The move comes on expectations that the Federal Reserve will cut its base rate by more than two percentage points over the next 12 months, which would be the biggest drop since the 1980s outside of a downturn. For bond bulls, this raises the risk that if the labour market, which cooled sharply in July, still shows resilience, the Fed will be able to cut interest rates at a more moderate pace. The first big test will come on Friday, when the government releases non-farm payrolls data for August, which economists expect to show a rebound in job growth and a fall in the unemployment rate.