Treasuries: Rate Path Diverges From the Dot Plot
The 10-year Treasury yield climbed to 4.27% on March 12, its highest level since mid-January, adding 30 basis points in just two weeks. The 2-year surged even harder — up 38 basis points to 3.76% from 3.38% on February 27. Bond markets are repricing the entire rate path ahead of the March 17-18 FOMC meeting, and the message is blunt: the Fed's dot plot is already stale. December's Summary of Economic Projections showed a median dot of one 25-basis-point cut for 2026. That projection assumed a trajectory where inflation would fade gracefully toward target. Instead, core PCE re-accelerated to 3.1%, [Q4 GDP was revised to a dismal 0.7%](/posts/2026-03-13/gdp-slashed-to-07-in-revision-that-blindsided-wall-street), and the Iran conflict has pushed energy prices into a supply shock that monetary policy cannot fix. The dots will be updated Wednesday. Treasury investors should prepare for a hawkish revision that narrows the gap between where the Fed thinks rates are going and where the market already says they'll stay.