Treasury Yields Climb as Markets Eye a Potential +50 Basis Point Rate Hike in March

Treasury yields rose on Tuesday, with the two-year note rate climbing as much as 12 basis points to just under 4.64%, a level last seen in November and within 20 basis points of last year’s high. Yields for three- and five-year maturities hit their highest levels[0] Prices stabilized later in the day, but could see a renewed push higher in Asia trading hours.[0]

The Treasury yield has risen sharply since early February, but unlike in 2022, when they rose on inflation and Fed fears, they are now climbing due to easing recession fears. The yield on the 10-year Treasury note increased by 5 basis points to reach 3.81%, a record high Short-term rates, more closely tied to the Fed, did not move much.[1] Investors still expect quarter-point Fed rate hikes at the March and May meetings, and markets are leaning toward a third hike in June or July.

In January, the consumer price index rose 0.5%, a growth of 6.4% compared to the same period in the previous The Core Consumer Price Index, not taking food and energy into account, increased by 0.4% during the past month, which is 5.6% higher than the same time[2] Economists expect the overall consumer price index to rise 0.5% in January, after December’s upwardly revised 0.1% gain, and for the annual rate to slip to 6.2% from 6.5%.

Since March 2022, the Federal Reserve has raised the rate eight times in order to decelerate the economy and decrease inflation.[3] Dallas Fed President Lorie Logan and St. Louis President James Bullard have both signaled they would not rule out supporting a +50 bp rate hike in March.[4] The CME FedWatch Tool projects an 87.8% probability of a quarter-point hike in March, bringing the Fed’s target rate to between 4.75% and 5%. It is currently estimated that there is a 12% chance that the Fed will raise interest rates by 50 basis points in March.[5]

On Friday, the dollar experienced a significant increase, reaching a six-week peak against a variety of currencies. This was due to the resilience of the United States’ economic data, leading investors to believe that more interest rate increases were imminent.[6] President Loretta Mester of the Federal Reserve Bank of Cleveland noted that there is a powerful economic argument for raising the rate by fifty basis-points, and St.[4]

0. “Traders Capitulate, Abandoning Fed Rate Cut Bets After CPI Spike” Yahoo News, 14 Feb. 2023,

1. “Dow Jones Futures Fall But Market Rally Keeps Climbing; Shopify Leads 10 Earnings Movers | Investor’s Business Daily” Investor’s Business Daily, 16 Feb. 2023,

2. “Fade The CPI; Here’s What Matters To The Fed, S&P 500” Investor’s Business Daily, 13 Feb. 2023,

3. “CPI: Prices rise 6.4 percent in January, seventh month of easing inflation” The Washington Post, 14 Feb. 2023,

4. “Dollar soars to six-week high on hawkish Fedspeak By”, 17 Feb. 2023,

5. “Hot Retail Sales Join Hot Jobs Data—How Will the Fed Respond?” The Ticker Tape, 15 Feb. 2023,–19393

6. “Dollar jumps to six-week high on higher rate expectations” CNBC, 17 Feb. 2023,