2-Year Treasury Yield — Impact on Fed Rate Prediction Markets
The 2Y yield is the most forward-looking proxy for near-term Fed policy. It often moves BEFORE the Fed acts, making it a leading indicator of meeting outcomes.
+/-
per 1σ surprise
↑ Hawkish
when high vs consensus
Pre-calibration
data points
Release Schedule
Frequency
Daily
Release time
Continuous
Delay
Real-time (daily close)
FRED series
DGS2
Historical Releases
Data populates automatically once the FRED ingest pipeline is running.
How 2-Year Treasury Yield Moves Fed Rate Prediction Markets
Daily 2-year U.S. Treasury constant maturity yield — the rate most sensitive to near-term Fed expectations.
The 2Y yield is the most forward-looking proxy for near-term Fed policy. It often moves BEFORE the Fed acts, making it a leading indicator of meeting outcomes.
The Bayesian Sensitivity Model
The model calibrates a sensitivity coefficient for each indicator: how many percentage points the cut probability at the next FOMC meeting moves per standard deviation of surprise. For 2Y Yield, the preliminary coefficient is ±+/- 2–4pp on cut probability. This means if2Y Yield comes in 1 standard deviation above consensus (hawkish surprise), the model reduces cut probability by approximately +/- 2–4pp on cut probability.
These coefficients are preliminary until calibrated from at least 20 historical observations of Kalshi price reactions to each release. The calibration uses a regression of (surprise_zscore × sensitivity_coefficient) against observed Kalshi probability changes, cross-validated against CME FedWatch data going back to 2015.
← Back to Fed Rate Tracker