2-Year Treasury Yield: Upward Trend Suggests Waning Odds for Another Fed Rate Cut

Market Overview Analysis by James Picerno covering: United States 2-Year. Read James Picerno's latest article on Investing.com

closed at 4.15% on Monday , the highest since Aug. 1. The pushback is that the recent rise in yields is still moderate following a sharp slide in September.

Nonetheless, the recent rise in the 2-year yield has dramatically narrowed the spread relative to Fed funds. At one point in mid-September, the 2-year yield was nearly 180 basis points below the Fed funds rate – a sign that the market is confident about the outlook for rate cuts. As of yesterday’s close, by contrast, the spread narrowed to a negative 71 basis points. The market is still betting on a rate cut, in other words, but confidence has waned.

The hope is that the mixed signals from markets may be resolved after this week’s economic reports. The highlights: Thursday’s release ofThe glitch is that October labor market data could be distorted by temporary factors.

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