Opinion: Pricing in No Fed Rate Cut This Year Will Push 2Y U.S. Treasury Yields Higher

Analysts at BNP Paribas noted in a report that if the money market dismisses the expectation of a Federal Reserve rate cut this year, the yield on the U.S. two-year Treasury note is expected to rise in the coming months. The analysts stated: "By September 2025, we expect the market to remove the previously anticipated two rate cuts this year and postpone them to 2026." This will lead to a rise in the two-year Treasury yield before it falls back at the end of the year. Analysts expect the two-year Treasury yield to rise to 4.10% in the third quarter and fall back to 4.00% in the fourth quarter. They anticipate the Federal Reserve will implement four rate cuts in 2026. (Jin10)