[tim333]

>"You look at what happened to the curve last night, that was pretty extreme by anyone's metrics - 2s-10s steepening 30 basis points in a few hours, I've certainly never seen that,"

The 2s-10s spread tends to act a bit like brakes for the economy. The 10 year yield is largely down to inflation and the 2 year largely controlled by the federal reserve. They raise the 2 year above the 10 year to slow the economy if you are getting inflation and lower it if the economy looks like slowing too much and going into recession. This looks like people expecting recession.

[ac29]

> They raise the 2 year above the 10 year to slow the economy

Who is the the "they" here? The government does not set 2 year or 10 year rates, they are priced by auction for new issues and priced by the market for secondary transactions.

[leereeves]

That's an interesting point. The 2-year yield did drop noticeably on April 3rd, the day after the tariffs were announced. Do you think the Fed did that to offset the impact of tariffs?

[ac29]

The Fed doesnt set the rate of the 2 year or any other treasury. They effectively put a floor on the price of the shortest dated treasuries by setting the overnight rate, but the longer dated the treasury, the less effect the federal funds rate has on it.