US 2-year yield rises as Fed rate hike odds increase to 60%

The 2-year Treasury yield surged to roughly 4.32-4.36% on August 28, climbing as much as 12.8 basis points in a single session. The catalyst: traders now price a roughly 60% probability of a Fed rate hike at the September FOMC meeting, nearly double the 35% odds implied just one day earlier. Warsh draws the line at Jackson Hole Speaking at the annual gathering of central bankers in Wyoming, Warsh made clear that the Fed isn’t ready to declare victory on inflation. He stated the central bank would take necessary actions if inflation doesn’t return to the 2% target quickly enough, reinforcing short-term interest rates as the Fed’s primary policy weapon. The 2-year yield, which is the bond market’s most direct expression of near-term rate expectations, hit its highest level in about a month. Strong employment data and rising energy prices had already been nudging yields higher throughout 2026, pushing 2-year rates to multi-month highs earlier in the year. Equities caught in the crossfire US stocks traded mixed as the bond market digested the new rate reality. The Nasdaq showed particular weakness, which makes sense. Higher discount rates compress the present value of future earnings, ...