2-Year Treasury Yield
The 2-year Treasury yield is the market's best single guess at where the policy rate will sit over the next two years. It moves before the Fed does, and it moves further when the market disagrees with the committee.
History
Why two years, and not three months
A three-month bill is almost entirely the current policy rate: there is no room for expectations to matter. A ten-year note is mostly term premium and long-run inflation. Two years sits in between, long enough to contain a full easing or tightening cycle and short enough that the expected path dominates the term premium.
That is why the 2-year is the instrument traders use to express a view on the Fed. When the market prices three cuts that the dot plot does not show, the gap appears here first.
Reading it against the 10-year
The difference between the two is the yield curve. Normally the 10-year is higher, because lending for longer should pay more. When the 2-year rises above the 10-year, the curve is inverted: the market expects policy to be easier in the future than it is today, usually because growth is expected to slow.
The 2-year on its own tells you where policy is expected to go. The pair tells you whether the market thinks the destination is higher or lower than the starting point.
What moves it between meetings
Inflation prints, payrolls and the Fed's own speeches move the 2-year more than any other maturity. A hot CPI number raises the expected path and the 2-year jumps; a weak payrolls number does the opposite. The size of the jump is a direct read on how much of the next meeting is being repriced.
Auction results matter at the margin. Weak demand at a 2-year auction means the market demanded a higher yield to absorb supply, which is a fiscal signal rather than a monetary one.
How this reading is calculated
We pull DGS2 from FRED, apply the transform shown above, and keep every observation the source publishes. Missing dates are dropped rather than filled, so holidays leave gaps instead of fake zeroes. The percentile is the share of observations since 1976 that sit below today's value.
The file is rebuilt daily. Derived series are computed by us from public-domain inputs and the formula is stated on this page, so anyone can reproduce the number from the original release.
How to read the percentile
The percentile compares today's reading with the indicator's own history, not with other indicators. A 20th percentile on this page means the current reading is lower than four fifths of all observations since 1976; it says nothing about whether that is good or bad for markets.
Extremes are the useful part. A reading above the 90th or below the 10th percentile is unusual enough to be worth explaining, and unusual readings tend to mean-revert. The middle of the distribution is mostly noise.
What is free and what is member-only
The current reading, the percentile and the full historical record are free. The most recent days of data are reserved for members, because that is the part that tells you what the indicator is doing right now rather than what it did years ago.
Members see every observation through the latest release, the same chart without the mask, and the same numbers on every indicator page. Nothing on this site is intraday.
Distribution since 1976
Each row is the share of historical observations at or below that level. A reading in the 90th percentile is higher than nine tenths of the record.
Important
Not investment advice. This page is published for information and education only. It is not a recommendation, solicitation, or offer to buy or sell any security. Market data may be delayed, incomplete, or revised. Indicators describe the past; they do not forecast returns. Past performance does not guarantee future results. Do your own research or consult a licensed financial professional before acting on anything you read here.
Questions
Does the 2-year predict Fed decisions?
It prices them. The yield is the market's expected average policy rate over two years, so it usually moves before a decision is announced, and it can be wrong when the data turns.
Why does the 2-year sometimes fall when the Fed hikes?
Because the market is looking past the hike. If the committee raises today but signals that the cycle is finished, the expected path over the next two years falls even as the current rate rises.
Is this the same as the federal funds rate?
No. The federal funds rate is the overnight rate. The 2-year is a market yield on a security that matures in two years, and it embeds expectations for that overnight rate.
Why is the recent data locked?
The level, percentile and full history are free. The latest sessions, which show what the market is doing right now, are member-only.