The 2-year Treasury yield, currently near 4.80% as of early October 2026, has climbed sharply from February lows around 3.38% amid a hawkish Federal Reserve under Chair Kevin Warsh. The central bank’s September rate hike to the 3.75–4.00% target range, the first since 2023, along with dot-plot signals of further tightening, has lifted near-term policy rate expectations. Sticky inflation—driven by oil prices above $100 amid unresolved Iran tensions and August CPI prints showing +0.4% m/m gains—has reinforced this view, while resilient growth, AI-related capital spending, and elevated fiscal deficits widen the term premium. The front end remains sensitive to incoming data, with upcoming CPI, employment reports, and the next FOMC meeting likely to dictate any near-term downside moves in the yield.