#BREAKING: The U.S. Bond market just completely reversed its 2026 rate outlook in 25 days.
The U.S. 2-year yield is the market's real time prediction of what the Fed will do next, it moves before the Fed announces anything.
From 2022 to 2023, the Fed hiked from near zero to 5.25% at the fastest pace in 40 years, and the 2-year yield led every single move higher.
From 2024 into early 2026, the Fed cut rates three times bringing the Fed Funds Rate down to 3.64%, and the 2-year fell with it the entire way while markets were comfortably pricing two more cuts in 2026.
Then March 2026 changed everything.
The 2-year yield just broke back above 4%, crossing clean through the Fed Funds Rate of 3.64% from below. The last time the 2-year was trading above the Fed Funds Rate, the market was pricing hikes not cuts and right now with the 2-year at 4.004% and Fed Funds at 3.64%, the bond market is pricing the same thing again.
Three weeks ago markets were pricing two rate cuts in 2026. Today they are pricing a possible hike. That is a complete reversal of the entire monetary policy outlook in 25 days.
The descending triangle on this chart just broke upward violently. Next resistance sits at the 2024 highs around 4.5% to 5%, and if oil stays above $90, that level gets tested
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