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There’s Trouble Brewing in the US Treasury Market
The 2-year Treasury yield jumped by 12 basis points on Friday, to 4.17%, the highest since February 2025, when it was on the way down. Back then, it was anticipating more rate cuts, which came in the fall that year, three of them. Now it’s anticipating rate hikes – multiple rate hikes. Yields reflect the summary of the vast bond market’s diverse opinions. Since the end of February, the 2-year yield has jumped by 79 basis points, having switched from expecting a rate cut, to expecting multiple rate hikes. It is now 54 basis points above the Effective Federal Funds Rate, an overnight rate that the Fed targets ... (full story)