finance
U.S. 2-Year Yields Rise 50 Basis Points Above Fed Funds Rate
Market pricing shows traders assigning higher probability to future rate increases than signals from Federal Reserve officials. The gap between the two-year Treasury yield and the federal funds rate reached its widest level since late 2022.
May 26, 5:14 AM·1m read1 source
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U.S. central bankers when assessing the path of interest rates. U.S. two-year Treasury yield climbed to a level 50 basis points above the federal funds rate.
The 50-basis-point gap marks the largest divergence recorded since late 2022. Market participants have continued to price in additional rate increases even as official communications have conveyed a different outlook. The pricing shift indicates that traders view the data-dependent path for policy as steeper than the trajectory currently signaled by the Federal Reserve.
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