The 2 year Treasury note yield is hawking again

The 2 year Treasury yield has ticked a higher high

It’s not what I was expecting, even after the booming January Payrolls report assured Hazel that she’s got job security as far as the eye can see. But the potential topping situation in the 2 year yield is what it is, and what is is currently back above the 50 day moving average and ticking a new high to the previous one.

2 year treasury note yield

While the likes of the 2 year yield and its hawkish implications on the Fed may well bring about a deflation scare per my favored scenario, the other thing to consider – in light of the ongoing Tech layoffs and economic concerns outside of Hazel’s ‘services’ purview – is the Stag. As in flation. Stagflation. As in a nasty combination of economic stress and rising costs.

I’d still lean to a 2023 deflation scare (post-Goldilocks, whether she’s ended already or has another leg), with the likes of the 2 year yield, the 3 month T-bill and the hawking Fed they are dragging along with them being the bringers of said deflation scare as the bloated mess finally caves. But what if the Fed gets caught having to remain hawkish well past the early signs of economic stress?

That would be the Stag… per one of several posts I made about it in 2021 and 2022 (before bringing the deflation side of the ledger into the discussion). Got to stay open minded.


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