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In the Fed They Trust

Investors push 2-year Treasury yields higher as central bank sticks to its rate-hike forecast

Donald Trump’s choice to lead the Federal Reserve would take the helm after a year in which the central bank’s credibility has shot up in the bond market’s eyes. Under the guidance of Janet Yellen, policy makers have stayed true to their forecasts for gradual tightening in 2017, and traders are bracing for more of the same under Jerome Powell. The two-year Treasury yield is near the highest since 2008 as the third rate increase this year looks set to take place next month and the market is already pricing in a greater chance of another hike in March.

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