The 2-year Yield currently trades at 3.805%, unfolding within a well-defined three-year falling wedge pattern. This formation follows an extraordinary surge from 0.105% in January 2021 to 5.283% in October 2023—reflecting rapid Fed rate hikes and inflation expectations. The 4.00% level, which aligns with the Fibonacci 23.6% retracement, has been tested multiple times, indicating it as the immediate battlefield for bulls and bears.
Warning Signs: If yields fail to stay above 4.00%, a decline toward 3.54% and 3.25% becomes probable, with further downside risk to 2.80%, 2.62%, 2.34%, and potentially 2.16%. A drop this deep would imply markets are aggressively pricing in future rate cuts or recession fears.
Breakout Scenario: A decisive break above 4.00% would violate the falling wedge ceiling, targeting 4.17% and 4.46% and possibly retesting the 5.00% highs. This would indicate renewed fears of sticky inflation or delayed Fed easing.
Fundamental Reflection: The 2-Year is the cleanest read on front-end Fed policy sentiment. Its sensitivity to Fed language, inflation trends, and geopolitical disruption (e.g., tariffs) means its technical posture is deeply rooted in macroeconomic fragility.
Warning Signs: If yields fail to stay above 4.00%, a decline toward 3.54% and 3.25% becomes probable, with further downside risk to 2.80%, 2.62%, 2.34%, and potentially 2.16%. A drop this deep would imply markets are aggressively pricing in future rate cuts or recession fears.
Breakout Scenario: A decisive break above 4.00% would violate the falling wedge ceiling, targeting 4.17% and 4.46% and possibly retesting the 5.00% highs. This would indicate renewed fears of sticky inflation or delayed Fed easing.
Fundamental Reflection: The 2-Year is the cleanest read on front-end Fed policy sentiment. Its sensitivity to Fed language, inflation trends, and geopolitical disruption (e.g., tariffs) means its technical posture is deeply rooted in macroeconomic fragility.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.