Pour the water into a small bowl, sprinkle the yeast on top and stir. Let stand until foamy, 5 minutes. Meanwhile, whisk the flour, 2 tablespoons granulated sugar and the salt in a large bowl. Work in the butter with your fingers until fine crumbs form. Make a well in the middle and pour in the yeast mixture. Stir until the mixture comes together into a shaggy dough. Turn out onto a lightly floured surface and knead a few times to bring the dough together into a ball (it will still be soft and sticky).
Coat a large bowl with vegetable oil, add the dough and turn to coat. Cover with plastic wrap and let rise in a warm place until doubled in size, about 2 hours. Press the dough down, cover and refrigerate overnight.
Position racks in the upper and lower thirds of the oven; preheat to 350 degrees F. Line 2 baking sheets with parchment paper. Mix the remaining 1/2 cup granulated sugar, the red sanding sugar and the cinnamon in a bowl. Turn out the dough onto a clean surface; pat into an 8-inch square, then cut into quarters.
Cut each dough quarter into 12 small squares. Sprinkle some of the red cinnamon sugar on the surface and roll each piece of dough in the sugar mixture into a 6- to 7-inch-long rope. Arrange 1 inch apart on the prepared pans, forming each rope into a horseshoe and crossing the ends.
Bake, switching the pans halfway through, until the cookies are firm, 30 to 35 minutes. Let cool completely on the pans. (These cookies are best the day they are baked.)