Treasury Rally Ignites Debate on How Fast Fed Needs to Cut
- Two-year yield dipped below 10-year for first time since 2022
- Traders are pricing in risk of a cut before September meeting
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A major rally in the $27 trillion Treasury market is laying bare anxiety that the US economy is sliding into recession and the Federal Reserve will need to start aggressively cutting interest rates.
US government debt surged Monday, pushing two-year yields — which are sensitive to monetary policy — below that of the 10 year note for the first time in two years. That brief normalization offered a vivid indication that growth concerns are fueling expectations for super-sized rate reductions starting in September, or sooner.