US Treasuries and the Fed: Yields, Auctions, FOMC — 2026-09-22
A week after the Fed's first rate hike since 2023 (to 3.75–4.00%), yields are stabilizing but the 10-year hovers around 5% and the 2s10s curve keeps flattening. New FOMC projections show 16 officials expect at least one more hike in 2026, with the median funds rate raised to 4.1%. A soft 2-year auction and a flattening curve are the latest market tests.
US Treasuries and the Fed: Yields, Auctions, FOMC — 2026-09-22
Top developments
Yields little changed as traders await fresh Fed guidance
Treasury yields were relatively unchanged on Tuesday (Sept 22) as investors awaited new clues on the state of the US economy and further Fed commentary following last week's hike.
The curve keeps flattening after the hike
The Fed's September 16 hike has pushed the 2s10s spread into deeper flattening territory — a classic late-cycle signal for the dollar and growth expectations. Financial stocks fell on Sept 22 as the flattening curve and AI-related concerns dominated trading.
Dot plot: 16 officials see at least one more hike in 2026, median 4.1%
The SEP released with the September 15–16 FOMC meeting shows the median federal funds rate projection raised to 4.1% for 2026 (from 3.8%), also 4.1% for 2027 and 3.9% for 2028. Per FX Street summaries: 16 officials project at least one more hike this year, and four penciled in 75bps of cumulative hikes across 2026.
Where yields settled post-decision
On September 16, the 2-year closed 7bp higher at 4.74%, while the 10-year closed 1bp higher at 5.01% — the 10-year initially spiked above 5% after the decision as Chairman Kevin Warsh highlighted persistent inflation risks, then eased lower on Sept 17. Fed funds futures now price roughly 4.2% by year-end, consistent with another hike.
Auction desk: 20-year cleared at 5.420%, 2-year disappointing
The September 15 20-year bond auction cleared at a high 5.420% yield. Meanwhile, a weak 2-year auction pressured the dollar in Wednesday trading, per Fisco/Japanese wire coverage — a demand signal worth tracking as issuance needs run heavy.
Local view
German-language media is focused on the 5% threshold and what the hike means for equities: finanzen.net (Sept 22) argues the Fed hike strips expensive stocks of their "best argument" with the 10-year at 5%, while wallstreet-online.de (Sept 17) flagged that Goldman Sachs sees the risk of another step in December. Nikkei reported long-end債 continued falling, with the 10-year at 5.02% on additional-hike expectations.
Context & numbers
- Fed funds target after Sept 16 decision: 3.75–4.00%, first hike since 2023.
- 2-year: ~4.74% (Sept 16 close); 10-year: ~5.01–5.02%, peaking above 5% at 5.011% on Sept 14–15, highest since October 2023.
- Year-end fed funds futures pricing: ~4.2%.
On the radar
- Fed minutes from the September meeting and further Warsh speeches — markets are watching for confirmation of a December move.
- Upcoming 2s, 10s and 30s auction results and bid-to-cover trends after the soft 2-year sale.
- Goldman Sachs' flagged December hike risk (per wallstreet-online.de) — market-implied odds via CME FedWatch.
- Continued 2s10s flattening and its read-through for financial stocks and the dollar.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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