One major theme of 2022 is the Federal Reserve raising to squash. Case in point, the Fed raised rates another 75 basis points on Wednesday. Will this be enough? What’s to come of interest rates? That question brings us to today’s chart, where we compare Fed Funds to the (a good short-term gauge of interest rates). As you can see, the 2-year yield and Fed Funds have been pretty correlated over the past 30 years. Typically, the 2-year yield leads Fed Funds on the way up and down. But what happens when it reaches extremes? Because this is what we have today.
Source: Bonds Analysis & Opinion
