What's the Difference Between the Fed Funds Rate and the Two Year Yield?

The two year yield is seen as a proxy for the Fed funds rate, ostensibly two years down the road. A lot of people look at it as what will the Fed do next? And we've seen in many hiking cycles that the two year yield has foreshadowed Fed rate cuts. When the two year peaks and then falls from that peak, the Fed stops hiking or they tend to cut. What's interesting is when we say roll over, that's the yield we're talking about. People are buying those bonds to make those yields fall. That's how you put in a top in that bond price.

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