Tip: Try a valid symbol or a specific company name for relevant results A pro-grade research workspace with advanced charts, company data and real-time news. Now part of Yahoo Finance Gold.Learn more 2-year Treasury yield reaches multi-year high after Fed rate hike Quartz·The Federal Reserve, the U.S. central bank founded in 1913, controls interest rates and oversees the financial system through its Board of Governors and 12 regional banks. Treasury yield hit 4.744% on Friday, its highest intraday level since July 2024, amid growing investor expectations that the Federal Reserve would deliver another rate increase after this week's hike, according to The Wall Street Journal.
Wednesday's rate increase from the Fed was accompanied by comments from Chair Kevin Warsh that market participants interpreted as signaling further hikes remain possible, according to the Wall Street Journal. Futures markets, as measured by the CME FedWatch tool, placed a 58% probability on a rate increase in October, up from 55% on Thursday. The 10-year yield was recently at 4.998%.
Since the Fed's Wednesday decision, the yield curve has continued to flatten, with the gap between the 2-year and 10-year yields compressing to its smallest margin since March 2025 on Thursday, though it recovered a bit by Friday. The 10-year Treasury yield held above 5% on Wednesday morning ahead of the Fed's decision, a level it had not traded at since 2007. Markets at that point were pricing in roughly a 92.5% chance of a quarter-point hike, which would push the upper bound of the Fed's target range to 4.0%.
The earlier spike in yields was fueled in part by crude oil crossing above $105 a barrel, driven by the Iran conflict and severely restricted shipping through the Strait of Hormuz, both of which stoked fears of renewed inflationary pressure. Traders had been weighing a hotter-than-expected August consumer inflation reading, which kept annual inflation well above the Fed's 2% target and helped push rate-hike odds sharply higher in the days leading up to Wednesday's decision. The 10-year yield touched an intraday peak of 5.041% on Tuesday, its highest level since 2007.
The 2-year yield also peaked at 4.688% during Tuesday's session, marking a multi-year high at that point, according to CNBC. "After all, he promised to follow the financial markets' lead. The 2-year and 10-year yields are clearly calling for a rate hike," Ed Yardeni, president of Yardeni Research, said in a note, according to CNN.
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