US 2-Year Treasury Yield (DGS2)
Daily yield on the US 2-year Treasury constant-maturity benchmark (DGS2) from June 1976 to the latest close (4.79 percent on 6 October 2026). The cleanest single gauge of market-implied Fed policy expectations over the next 24 months. It usually moves ahead of Fed Funds decisions and gives the leading edge of most macro pivots. Includes the September 1981 record (16.95 percent close), the February 2021 low (0.09 percent) and the October 2023 cycle high (5.19 percent). AUD-trader framing on Fed reaction-function reading and the AUD/USD short-rate differential.
Chart
Daily US 2-year Treasury constant-maturity yield from June 1976. The cleanest Fed-expectations market gauge. Recession-shaded from 2001.
What does the 2Y yield tell you?
The 2-year Treasury yield is the market's pricing of the average Fed Funds rate over the next 24 months plus a small term premium. It is updated daily, intraday-liquid, and effectively reflects the bond market's current best estimate of Fed policy.
Mechanically: if the market expects the Fed to hold rates flat at 5 percent for 2 years, the 2Y should price near 5 percent. If the market expects an average of 4 percent (because cuts are priced in over the 24 months), the 2Y prices closer to 4 percent. The gap between the 2Y and the current Fed Funds rate is therefore a measure of how much cutting or hiking the market expects.
Trader takeaway
- Falling 2Y = market pricing cuts. Risk-asset friendly (lower discount rate, lower carry cost on leverage). Coincides with AUD/USD strength.
- Rising 2Y = market pricing hikes. Risk-asset hostile. AUD/USD weakness.
- 2Y dropping below Fed Funds. Bond market disagrees with the Fed on hold; effectively pricing in coming cuts. The Fed has often followed within months.
- 2Y vs Fed Funds futures. Fed Funds futures (CME FedWatch) provide the explicit market-implied probability of each future Fed decision. The 2Y aggregates the path. Use both for verification.
Methodology
- Source. FRED series DGS2 (daily, constant-maturity, par yield).
- Endpoint. Public fredgraph.csv.
- Recession shading. NBER-dated US recessions from 2001 onwards (2001, 2007-09, 2020). Earlier recessions are not shaded.
- Refresh cadence. An automated cloud refresh pulls the series from FRED twice a day (07:30 and 13:30 Sydney time) and the site rebuilds when the data changes. If FRED is unreachable, the last good data is kept.
Related tools
- 10Y Treasury Yield - the long-end pair.
- 2Y/10Y Yield Curve - the recession-indicator spread.
- Fed Funds Rate - the policy rate anchor.
- CPI Inflation YoY - what drives the 2Y.
Frequently asked questions
It is the par yield on a notional 2-year Treasury, computed daily by the US Treasury (FRED series DGS2). Mechanically it reflects the market's expectation of the average overnight Fed Funds rate over the next 24 months plus a small term premium. When the market expects the Fed to cut, the 2Y falls; when it expects hikes, the 2Y rises. The 2Y usually moves before the Fed says anything explicit.
The 2Y is short enough that almost all of its variation is driven by Fed-policy expectations. The 10Y has substantial term-premium and long-run-growth-expectations contribution that obscure the policy signal. For 'what is the Fed expected to do in the next 12-24 months', the 2Y is the cleanest single market read. For 'what does the bond market think about long-run inflation and real growth', the 10Y is better.
Three channels. (1) AUD/USD: US 2Y vs ACGB 2Y differential is one of the highest-beta drivers of AUD/USD on horizons of weeks to months. (2) AU short-end yields track the US 2Y closely - AU 3Y futures are watched alongside the US 2Y as a global short-rate complex. (3) Crypto and equity carry positioning: leveraged risk-asset positions price off short USD rates. A falling 2Y is a tailwind for risk-asset carry; a rising 2Y is a headwind.
The 2Y closed at 5.19 percent on 17 October 2023, its highest close since July 2006, two days before the 10Y set its own cycle high (4.98 percent close). That was the market fully pricing the higher-for-longer Fed. The 2Y then fell as cuts were priced and delivered, reaching a 3.38 percent close on 27 February 2026, before turning back up as inflation re-accelerated in 2026. The latest close is 4.79 percent on 6 October 2026. The 2Y is the standard 'pivot signal' for traders watching macro inflection points.
The difference between the 10Y and the 2Y is the most-watched yield-curve indicator. A positive spread (10Y > 2Y) is the normal slope; a negative spread (yield curve inversion) has come before every US recession since the T10Y2Y series began in 1976, with lags of roughly 6 to 24 months. The inversion that began in July 2022 (after a brief dip in April) lasted until late August 2024, the longest continuous inversion in the series. The 2Y/10Y curve has its own dedicated chart on this site.
FRED series DGS2 (daily, constant-maturity, par yield). The series begins June 1976 and the chart shows the full history. An automated refresh pulls it from FRED twice a day (07:30 and 13:30 Sydney time) and the site rebuilds when the data changes; if FRED is unreachable, the last good data is kept.
About the author
