⚖️🇺🇸U.S. 2-Year Yield Rises to Highest In More Than a Year: Cable FX Macro

• The US 2-year Treasury yield has climbed sharply to multi-month highs, hitting levels last seen in February 2025 after the Federal Reserve’s June FOMC meeting. On June 17, the yield spiked more than 16 basis points in a single session — the largest one-day jump on an FOMC announcement day since March 2008 — closing around 4.20–4.22%. It has since consolidated near those elevated levels into Monday’s close.

• Markets have responded aggressively. Rate futures now fully price in a Fed hike by October, with meaningful odds building for September. The front end of the curve has borne the brunt of the repricing, pushing the 2-year yield higher while longer-dated yields (10s and 30s) rose more modestly.

• The move also reinforces the post-FOMC theme that the Fed is now data-dependent in a hawkish direction. With core PCE due Thursday (expected ~0.3% m/m), any upside surprise would likely extend the 2-year yield’s gains and keep USD bid. A softer print could trigger some profit-taking in yields but is unlikely to reverse the broader repricing unless it significantly undershoots.

• On Monday, BofA revised its Fed rate hike call, it now expects moves in September, October, and December. A net 75bps of tightening, which goes contrary to what the desk at ING is forecasting; they think the Fed's hawkish rhetoric will eventually fade as the jobs market is not as strong as markets think and inflation eases.