2-Year Treasury Yield — Historical Chart
GS2The 2-year Treasury yield reflects near-term Fed rate expectations. It moves sharply when hike or cut expectations shift and is one of the most sensitive indicators of monetary policy direction.
Related — Monetary Policy & Interest Rates
SOURCE: FEDERAL RESERVE ECONOMIC DATA (FRED) · 0 OBSERVATIONS
The 2-year Treasury yield is the most sensitive market rate to near-term Federal Reserve policy expectations. It moves sharply on CPI prints, Fed speeches, and FOMC decisions — often more than the 10-year — because it prices exactly what the Fed will do over the next two years.
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Frequently Asked Questions
- Why does the 2-year yield move more than the 10-year?
- The 2-year yield is anchored almost entirely to near-term Fed rate expectations. When a hot CPI print raises the probability of a near-term hike, the 2-year surges because it directly prices those expected hikes. The 10-year also moves, but is dampened by long-run expectations.
- What does a high 2-year yield relative to the 10-year mean?
- When the 2-year yield exceeds the 10-year yield (yield curve inversion), it signals markets expect the Fed to cut rates in the future — which historically occurs in recessions. Every US recession in the past 50 years was preceded by a 2s/10s inversion.
- How do traders use the 2-year yield?
- Traders watch the 2-year as a real-time Fed expectations gauge. If the 2-year surges above fed funds rate expectations priced into futures, it signals the market thinks the Fed is behind the curve. If it falls below, the market expects imminent cuts.
- What drives the 2-year Treasury yield?
- Almost entirely Fed policy expectations. CPI prints, employment data, Fed speeches, and FOMC meeting outcomes are the primary drivers. Long-run factors (demographics, global savings) that affect the 10-year have almost no influence on the 2-year.
Economic data sourced from the Federal Reserve Bank of St. Louis (FRED). Data is updated according to the release schedule of the issuing agency. Provided for informational purposes only and does not constitute investment advice.