The 2-year Treasury yield, recently trading near 4.78% as of October 1 after closing September around 4.88%, remains sensitive to Federal Reserve policy expectations amid persistent inflation. The FOMC raised the federal funds target to 3.75-4.00% in September, with 16 of 18 participants projecting at least one additional hike by year-end; however, recent comments from officials including New York Fed President Williams have reduced October hike odds to roughly 25-30% ahead of the October 27-28 meeting. August CPI rose 0.4% month-over-month and 3.4% year-over-year, while core measures showed modest cooling. Key near-term catalysts include the October jobs report, September CPI release on October 14, and FOMC minutes, which could shift market-implied rate paths and short-term yield levels.
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