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Committee reviews treasury yield curve and FOMC projections; staff flags 2-year rate sensitivity
Summary
Presenter and members examined the yield curve and FOMC projections, noting the two-year Treasurys sensitivity to Federal Reserve policy and a 2026 median projection of 3.25-3.50 percent in the committees slide deck.
Adrian Gonzalez presented charts of the treasury yield curve and told members the curve is not inverted but has an irregular shape, with the two-year yield particularly responsive to Fed policy expectations. "The 2 years ... are fairly sensitive to the Federal Reserve adjusting its policy rate," Gonzalez said.
The slides also showed FOMC member projections; Gonzalez summarized the 12/10/2025 quarterly projection and noted the presenter-highlighted median for 2026 "showed a median estimated range of 3.25 to 3.50," which would imply another 25-basis-point move in the committees scenario discussion. Members discussed how market pricing and forecasts can soften the impact of future Fed decisions and how that dynamic affects the committees benchmarking and timing for reinvestments.
