2-year Treasury yield exceeds federal funds rate at 4.14%
The 2-year U.S. Treasury yield has risen above the Federal Reserve’s benchmark overnight lending rate, the federal funds rate, which sits between 3.50% to 3.75%.
The yield on the 10-year U.S. Treasury Note was 4.58%, slightly higher than it was following ‘Liberation Day’ in April of 2025.
The 2-year yield reflects where investors expect the federal funds rate to go in the near term, and the fact that it is now well above the federal funds rate is meaningful.
History suggests the Fed will adjust rates in response to this yield curve inversion.