The 10-year U.S. Treasury yield rose to its two-year record high above the 1.83% level on Tuesday as investors are preparing for an aggressive move by the Federal Reserve in tightening the QE.
The 10-Y note rose to 1.8305% while the yield on the 30-Y Treasury bond increased to 2.1492%. In the meantime, the 2-year bond surpassed 1% for the first time in two years at 1..0364%.
Earlier this year, the Federal Reserve stated that it plans to start reducing the amount of bonds holding, according to the minutes from its December meeting. Even though the minutes did not specify the timeline for cutting the nearly $8.3 trillion in Treasuries and mortgage-backed securities the Fed is holding, the market expected the process to begin in the next few months in 2022. The market is now pricing in an 80% possibility of a rate hike in March.