Two-year Treasury yields surged to their highest levels in 17 years following the hawkish stance of the Federal Reserve.

Two-year Treasury yields hit a 17-year high as the Federal Reserve maintained interest rates but took a more hawkish stance on future policy. The Fed projected rate hikes by year-end and a tighter monetary policy through 2024.

Two-year yields peaked at 5.152%, the highest since 2006, settling at 5.120%. Benchmark 10-year note yields reached 4.359% and ended at 4.339%, the highest since 2007. The yield curve inversion between two-year and 10-year notes deepened to minus 78 basis points. Fed funds futures implied a 33% chance of a rate hike in November and 47% in December.

Fed policymakers expected rates to peak at 5.50%-5.75% this year, with only a half-percentage-point decline in 2024, reflecting confidence in the economy’s resilience to higher rates.