2-year Treasury Yield Blasts Above 4.1%, Highest Level Since 2007

Stock Market News
Stock Market News

The yield on the 2-year Treasury note blasted above 4.1% after the Federal Reserve hiked interest rates by an additional 0.75 percentage point, and soared to its highest level since 2007.

The policy-sensitive 2-year Treasury added 15 basis points to 4.113%, to a level not seen since October 2007, when it hit a high of 4.138%. Meanwhile, the yield on the benchmark 10-year Treasury climbed to a high of 3.64%, its highest level since February 2011.

Some investors believe the significant inversion, with short-term rates higher than long-term rates, points to the risk of a recession.

Yields and prices move in opposite directions, and 1 basis point is equivalent to 0.01%.

The Fed raised rates by 75 basis points, or 0.75 percentage point, at its September meeting and signaled that it would keep hiking rates until the funds level hits a “terminal rate,” or an end level, of 4.6% next year.

The central bank plans to continue the aggressive rate hikes against inflation this year, raising rates to 4.4% in 2022, according to its median forecast released on Wednesday. With only two policy meetings left in the calendar year, chances are the central bank could conduct another 75-basis-point rate hike before the year-end.