Treasury yields surge as bond markets price in potential rate hikes. The 2-year yield spiked 53 basis points since early March to 3.91%, flipping from rate cut expectations to rate hike expectations in just three weeks. The 3-year yield similarly jumped to 3.92%. This marks the first time since November 2023 that the 2-year yield exceeded the Federal Funds Rate. Inflation concerns have moved front and center as geopolitical tensions drive energy prices higher. The government sold 606 billion dollars in Treasury securities this week as borrowing demands persist. Bond markets now anticipate potential rate hikes as soon as late 2025 or 2026, signaling a significant shift from earlier expectations of continued rate cuts throughout this year.
