Chart of the Day - Monday, March 13th, 2023

Today’s Chart of the Day was shared on Twitter by Liz Ann Sonders (@LizAnnSonders). The two-year Treasury yield has fallen over 100 basis points in the past three days, marking its sharpest drop since Black Monday in 1987. Ironically, the rise in short-term yields was responsible for Silicon Valley Bank's demise, and now short-term yields are pulling back at a historic rate. The Fed definitely broke something, and the market is betting that they'll have to slow their pace of aggressive rate hikes to prevent further implosions. There's a lot of debate over whether a Fed pivot will be positive or negative for the stock market and the economy. Either way, the market is betting the Fed will stop raising rates, as the Federal Funds Rate has historically followed the 2-year yield.