Bond traders haven’t moved so swiftly to get ahead of the Federal Reserve in at least four decades, underscoring the dramatic tightening in financial conditions that has rippled across markets even before the central bank starts raising interest rates.
Yields on two-year Treasuries, which are highly sensitive to changes in monetary policy, have surged from 0.28% since the end of September to about 1.87% as traders prepare for the cycle of hikes that’s expected to begin Wednesday.
