2-year Treasury yield rockets higher as many Fed officials signal possible hike this year
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- 2-year Treasury yield climbed more than 16 basis points to 4.216%, and the 10-year yield rose more than 7 basis points to 4.499%, after the FOMC meeting under new Chair Warsh.
- The FOMC's median Fed Funds Rate estimate for end-2026 rose to 3.8% from 3.4% in the March projections, signaling the committee sees at least one rate hike as necessary this year.
- Kevin Warsh chaired his first FOMC meeting this week and was the only one of 19 officials who did not submit a rate projection, according to the source.
- The FOMC post-meeting statement pared down prior language that hinted at future easing, per the report.
- Warsh announced the establishment of five task forces addressing Fed communications, the balance sheet, and other central-bank issues, calling for a Reserve that is "clear-eyed about its mission, fit for purpose, and focused on the future."
- Gina Martin Adams, chief market strategist at HB Wealth, said markets are "on edge" over the shifts in the dot-plot, votes, and Fed language, noting rising inflation concerns despite a possible Middle East peace deal.
Why it matters: The Fed's first meeting under Chair Warsh delivered a higher 2026 rate path and stripped out easing-leaning language, and bond markets priced it in immediately — the 2-year yield jumped more than 16 basis points in a single session. With the committee now seeing at least one 2025 hike as necessary, rate-sensitive sectors and borrowers lose the assumption that relief is pre-signalable.
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