In the weeks since Silicon Valley Bank’s collapse and associated crisis in the global banking world, the U.S. Treasury market has been ground zero for dramatic price moves shaping investor sentiment.
And the standout within this volatility has been the swing in the yield on 2-year Treasury notes.
As we noted earlier this month, the yield on Treasury notes and bonds can be thought of as the average of the Federal Reserve’s benchmark interest rate over that period.
As a result, the 2-year is often seen as most representative of the near-term path of interest rates, capturing what traders think the fed funds rate will be, on average, over the next two years.
Source : Banking crisis shakes US markets and poses surprise risk to economy