us treasury yields tumbled in march as bankingsector woes roiled markets with twoyear rates potentially seeing their biggest monthly drop since 2008 the yield on the twoyear treasury note finished thursday at 4097 down 698 basis points so far in march putting it on pace for its biggest monthly decline since january 2008 based on 3 pm eastern time levels according to dow jones market data twoyear treasurys “rallied unimaginable amounts in the middle of the month” said michael kushma chief investment officer of broad markets fixed income at morgan stanley investment management in a phone interview around midmarch the federal reserve announced an emergency bank term funding program after the sudden collapse of california’s silicon valley bank and new york’s signature bank the run on silicon valley bank had sparked contagion fears prompting the fed to create a new program to help banks meet the needs of their depositors and shore up confidence in the banking system treasury yields sank amid the regional banking tumult with investors questioning whether the fed would keep hiking interest rate hikes to battle high inflation as financial stability concerns rose traders in the fedfunds futures market began betting on potential rate cuts later this year the bond market was worried that bankingsector issues heightened the risk of recession with the potential for constrained lending to hurt the us economy said kushma pointing to the recent drop in twoyear treasury yields it’s been a volatile month for shorterterm maturities which he said are more sensitive to what the fed might do with its monetary policy in the next three to six months twoyear treasury yields had swung higher prior to the bank failures continuing their rise after fed chair jerome powell’s congressional testimony on monetary policy on march 7 had a hawkish tone but they reversed course later this month falling from their 52week high of 5064 on march 8 according to dow jones market data the yield on the twoyear treasury note tmubmusd02y was little changed around midday friday at around 411 after the fed’s preferred inflation gauge showed signs of softening according to factset data at last check meanwhile 10year treasury yields tmubmusd10y were down about three basis points at 352 around midday longerterm 10yields have been “stuck in a range” for a while said kushma while twoyear yields were on track for their biggest monthly drop in more than a decade 10year yields in march were heading for their largest monthly decline since november based on 3 pm eastern time levels according to preliminary findings thursday from dow jones market data