BofA Urges Clients to Position for 2-Year Treasury Yields Rising as Fed Rate Seen Above 5%

BofA's call hinges on a gap between market pricing and the bank's view of where the hiking cycle ends, a gap that matters most for rate-sensitive assets, including crypto and tokenized RWAs that trade on duration and liquidity expectations. The strategists' argument is that the rates market is still underestimating the terminal rate, which implies two-year yields have room to rise. Whether swap pricing converges toward BofA's view or the Fed validates the market's more modest path is the open question.