2-year Treasury yield sees biggest drop since 1987 as bank fallout upsets rate-hike calculations

Bond yields fell sharply on Monday as the failures of Silicon Valley Bank and Signature Bank had investors factoring in the chances of the Federal Reserve either pausing its rate-hike campaign or raising borrowing costs more slowly next week.

What happened

What drove markets

The monetary policy-sensitive 2-year Treasury yield plunged by more than a half-of-a-percentage point on Monday as investors fretted that spillover from the banking system — after the collapse of California’s Silicon Valley Bank SIVB and…