Fed Rate Hike Shock Sends Two-Year Treasury Yields Higher

Fed rate hike bets sent the two-year Treasury yield sharply higher after a hotter-than-expected U.S. CPI report showed inflation spreading. Shriya Samarth, StoneX Head of Rates, EMEA, explains how a hot inflation print, hawkish Federal Reserve officials and year-end money market demand are reshaping the front end of the U.S. Treasury curve. Markets now fully price a 25 basis point Federal Reserve rate hike in December, as food, medical care and shelter costs point to second-round inflation. Hawkish comments from four FOMC members, including Governor Christopher Waller, have also pulled a 50 basis point hike into the debate. Year-end demand from money market funds is propping up Treasury bills, which are not yet yielding enough to reflect a higher terminal rate. Further out the yield curve, AI capital spending cuts both ways for Treasury yields, with high capex lifting them and slower spending able to pull them lower. 00:00 - Two-Year Treasury Yields Jump 00:26 - Hot CPI Spreads to Shelter 01:14 - Fed Hawks Float a 50bp Move 02:19 - Money Market Funds vs. T-Bills 03:04 - AI Capex Cuts Both Ways 03:45 - Main Street Tests the Fed0 Discover Actionable Insights with StoneX Market Intelligence: https://shop.stonex.com/products/stonex-essential-bundle?selling_plan=4455759972&variant=45955323625572&utm_source=youtube&utm_medium=social&utm_campaign=sxtv_guest_shriya_samarth&utm_content=share Like and subscribe for more financial market insights. #FederalReserve #StoneX #ShriyaSamarth #Treasuries --------- Like this video? Subscribe and turn on notifications so you don't miss any videos from StoneX: https://www.youtube.com/@stonex_official Visit https://www.stonex.com/en/insights/thought-leadership/?utm_source=youtube&utm_medium=social for insights, perspectives and thought leadership from StoneX's global network of experts. Visit our website: https://www.stonex.com?utm_source=youtube&utm_medium=social