The policy-sensitive US 2-year Treasury yield fell on Wednesday as the Federal Reserve announced a widely-expected 1/4-point cut in its target rate. Despite the slide in the 2-year yield, it’s unclear if the upside trend will pause or reverse. The 2-year yield is widely followed as a proxy for near-term policy expectations. As of yesterday’s close, the 2-year yield, at 4.20%, remains modestly below the 4.50%-4.75%, which implies a forecast for another rate cut. Fed funds target range. Fed funds futures are pricing in a 71% probability for a 1/4 rate cut at next month’s FOMC meeting.
