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The second quarter was a wild ride for the 10-year U.S. Treasury note. The 10-year started the quarter yielding 2.35%, rose as high as 2.41% and fell as low as 2.14%. It finished the quarter at 2.31%. The 2-year U.S. Treasury dropped 14 basis points (0.14%) over the quarter, causing the yield curve to flatten by 18 basis points (see graph below). The Federal Reserve raised the Federal Funds rate by 25 basis points in June to a range of 1.00% – 1.25%. Historically, Federal Reserve tightening cycles (rising rates) are accompanied by a flattening yield curve. This once again appears to be the case.