2-Year Treasury vs T-Bills: Lock In or Keep Rolling?

The 2-year Treasury vs T-bills question got sharper on November 6, 2026, when October payrolls rose 165,000 and the 2-year yield jumped to 4.52%. On Treasury’s November 5 curve, the 2-year paid 4.46% against 4.17% on 3-month bills. Locking in wins unless bills average about 4.50% for the next two years. One Fed hike alone does not get them there.

Key takeaways

• The 2-year note yielded 4.46% vs 4.17% for 3-month bills on November 5, a 29-basis-point gap.
• On $10,000, locking in earns about $58 more over two years than rolling bills at today’s rate.
• Rolling needs bills to average roughly 4.50% from February 2027 to break even.

What did the November 6 jobs report do to Treasury yields?

It pushed short-term yields up and made a December rate hike the market’s base case. The Bureau of Labor Statistics reported 165,000 new jobs for October against a Reuters poll forecast of 65,000. The 2-year yield rose 6 basis points to 4.52% intraday, and traders’ odds of a December hike climbed to 78% from 70%.

The details made the report stronger still. The BLS release shows unemployment slipped to 4.1%, and August and September were revised up by a combined 84,000 jobs. Average hourly earnings rose 3.1% from a year earlier, to $38.00.

Bond markets read that as a green light for tightening. According to Reuters, the 10-year rose 3 basis points to 4.87% and the 30-year 2 points to 5.27% on November 6. Spartan Capital’s Peter Cardillo said the data “just confirms that the Fed has no choice but to raise rates in December.”

The Fed is not hiking from zero. Its October 28 statement held the federal funds target at 3.75% to 4.00%, but two members, Lisa Cook and Beth Hammack, dissented in favor of a quarter-point hike. That split is why the 2-year moves so hard on every data point.

2-year Treasury vs T-bills: which pays more right now?

The 2-year note pays more today, by 29 basis points on Treasury’s official November 5 curve. Bills pay less but reset every few months, so they capture future hikes. The trade-off is simple: lock a known 4.46% for two years, or accept 4.17% now and bet on higher rates later.

The Treasury par yield curve shows a steady climb from bills to notes. Treasury had not posted its November 6 row when this was written, so the table uses the last official close.

Maturity	Yield (Nov 5, 2026 close)	Gap vs 3-month bill	Reinvestment risk	Price risk if sold early
3-month bill	4.17%	—	High (resets 8 times in 2 years)	Negligible
6-month bill	4.19%	+0.02 pts	High (resets 4 times)	Negligible
1-year bill	4.28%	+0.11 pts	Medium (resets once)	Low
2-year note	4.46%	+0.29 pts	None until maturity	Moderate (about 1.8% per 1-point rate rise)

Look at the middle of that table. The 1-year bill already yields 4.28%, 11 basis points over the 3-month. The curve has partly priced the December hike in already. Rolling bills only beats the 2-year if hikes go further than the market expects.

How much does locking in a 2-year Treasury earn on $10,000?

About $892 in interest over two years at 4.46%, before reinvesting coupons. Rolling 3-month bills at an unchanged 4.17% earns about $834. The gap is roughly $58 on $10,000, or $580 on $100,000. These figures use simple annual math at November 5 yields and ignore compounding.

Here is the arithmetic:

1. Lock in: $10,000 × 4.46% = $446 a year. Two years = $892.
2. Roll bills, rates flat: $10,000 × 4.17% = $417 a year. Two years = $834.
3. Difference: $892 − $834 = $58 in favor of the note.
4. Breakeven: the first quarter is locked at 4.17%. To match 4.46% over eight quarters, the remaining seven must average (4.46 × 8 − 4.17) ÷ 7 = 4.50%.

At Friday’s intraday 4.52%, the bar rises. The note would pay $904 over two years, and the breakeven bill rate climbs to about 4.57%. Every basis point the 2-year adds makes rolling harder to justify.

What happens if the Fed hikes, or cuts?

These are arithmetic scenarios, not forecasts. Each assumes bill yields move by the full amount of the policy change after the first quarter and stay there.

Scenario for bill yields	Average roll rate	2-year interest, rolling bills ($10,000)	vs locking 4.46% ($892)	Who wins
Bills fall 50 bp to 3.67%	3.73%	$747	−$145	2-year note, by a lot
Unchanged at 4.17%	4.17%	$834	−$58	2-year note
One 25 bp hike, bills at 4.42%	4.39%	$878	−$14	2-year note, narrowly
Two hikes, bills at 4.67%	4.61%	$922	+$30	Rolling bills

The payoff is lopsided. Two full hikes buy the bill roller about $30. A 50-point slide in bill yields costs the same investor $145. You are taking a downside about five times the upside for flexibility.

Is the 2-year Treasury riskier than T-bills?

Only if you might sell before maturity. Both are backed by the U.S. government, so there is no credit difference. The risk is price: a 2-year note loses value when yields rise. Held to maturity, you get the full $10,000 back. Sold early after a rate jump, you take a loss.

A useful yardstick is the iShares 1-3 Year Treasury Bond ETF (SHY). iShares lists its effective duration at 1.82 years as of November 5, 2026. That means a 50-basis-point rise in yields would cut its price by roughly 0.9%, or about $91 on $10,000.

Bills carry the opposite risk. Their price barely moves, but their income does. If the economy turns and the Fed cuts, the bill roller’s income falls with it. That is reinvestment risk, and it is the cost nobody sees on a statement until it happens.

Should you buy Treasuries directly or through an ETF?

Direct ownership is cheaper. Treasuries bought at auction through TreasuryDirect carry no fee, and most large brokers sell them without a commission. ETFs add an expense ratio but give daily liquidity and automatic rolling. For a two-year hold, the fee is small but real.

• iShares 0-3 Month Treasury Bond ETF (SGOV): 0.09% expense ratio, or $9 a year on $10,000. iShares reports a 30-day SEC yield of 3.83% as of November 4, 2026, and $116.9 billion in net assets.
• iShares 1-3 Year Treasury Bond ETF (SHY): 0.15% expense ratio, or $15 a year on $10,000. Its 30-day SEC yield was 4.59% as of November 4, with a 4.47% average yield to maturity on November 5.
• Direct bills or notes: $0 in fund fees. You handle the rolling yourself.

One skeptical note on SGOV. Its 3.83% SEC yield sits 34 basis points below the 3-month bill’s 4.17%. Part of that is the fee, part is that the fund holds shorter bills, and part is that the SEC yield looks back 30 days. Whatever the mix, an investor comparing the fund’s quoted yield with a fresh 2-year note is not comparing like with like.

Both routes share a tax edge. Interest on Treasury bills and notes is exempt from state and local income tax, so the comparison between them does not change by state. For other cash options, see our T-bill ETF vs money market fund breakdown and our USFR vs SGOV floating-rate comparison.

Who should lock in and who should roll bills?

It comes down to when you need the money and whether you can sit through price swings. Anyone with a fixed date two years out gets more income and certainty from the note. Anyone who may need cash at short notice, or wants dry powder, is better served by bills despite the lower yield.

Investor profile	Better fit	Why
Saving for a known bill in late 2028 (tuition, down payment)	2-year note	Matches the date, locks 4.46%+, no price risk if held
Emergency fund	T-bills or SGOV	Cash available within weeks, minimal price movement
Retiree living on interest	Ladder of bills and 1–2 year notes	Spreads reinvestment risk across dates
Waiting to buy stocks on a dip	T-bills	Short maturities keep cash ready without selling at a loss
Convinced the Fed hikes twice or more	T-bills	Rolling only wins if bills average above about 4.50%

Longer bonds are a different trade. We ran that math in TLT vs SGOV, and our Fed rate hike bond ETF piece shows how much a quarter-point costs across durations.

What to watch next

Four dated events over the next five weeks will decide whether the 4.50% breakeven looks cheap or expensive. Inflation data and the Fed meeting matter most, because they set where bill yields go after December.

• November 10, 2026: October CPI, per the BLS release calendar. A hot print strengthens the case for more than one hike.
• November 23, 2026: the next 2-year note auction, with settlement on November 30. Buyers at auction get that day’s market yield.
• December 4, 2026: the November jobs report, per the BLS.
• December 8–9, 2026: the FOMC meeting, which includes new economic projections. The dot plot will show how many hikes officials expect.

FAQ

Is a 2-year Treasury better than T-bills right now?

On yield, yes. The 2-year paid 4.46% vs 4.17% for 3-month bills on November 5, 2026. Bills only come out ahead if their yields average about 4.50% or more over the next two years.

What is the breakeven rate for rolling T-bills?

About 4.50% for the seven quarters after the first, using November 5 yields. At Friday’s 4.52% 2-year yield, the breakeven rises to roughly 4.57%.

Can I lose money on a 2-year Treasury?

Only if you sell before maturity after yields rise. With a duration near 1.8 years, a 50-basis-point rise cuts the price by roughly 0.9%. Held to maturity, you receive full face value.

Does a December Fed hike make T-bills the better choice?

Not by itself. If one 25-basis-point hike lifted bills to 4.42% and they stayed there, rolling $10,000 would still earn about $14 less than locking in 4.46% over two years.

Are T-bill and 2-year Treasury interest taxed the same?

Yes. Both are subject to federal income tax and exempt from state and local income tax, so taxes do not change the comparison between them.

Is SGOV a good substitute for buying T-bills directly?

It is convenient, but it costs 0.09% a year, or $9 per $10,000, and its 3.83% SEC yield on November 4 trailed the 4.17% 3-month bill. Direct bills carry no fund fee.

The bottom line

On the numbers, the 2-year Treasury is the better deal for money you will not need until late 2028. It pays 29 basis points more than 3-month bills on the official November 5 curve, and more after Friday’s jobs-driven jump to 4.52%. Rolling bills wins only if the Fed hikes at least twice and holds there. A single December hike leaves the roller about $14 behind on $10,000.

The case for bills is liquidity, not yield. If the cash is an emergency fund or money waiting to be invested, accept the lower rate. If it has a two-year job to do, the note does it for more money and with no rate guessing.

This article is journalism, not investment advice. Do your own research before investing.

Sources

• Bureau of Labor Statistics: Employment Situation, October 2026 (released November 6, 2026)
• Reuters via Yahoo Finance: Strong October jobs report sends yields higher (November 6, 2026)
• Federal Reserve: FOMC statement, October 28, 2026
• Federal Reserve: FOMC meeting calendar
• U.S. Treasury: Daily par yield curve rates, November 2026
• iShares: 0-3 Month Treasury Bond ETF (SGOV)
• iShares: 1-3 Year Treasury Bond ETF (SHY)
• Bureau of Labor Statistics: CPI release schedule
• US500: Upcoming Treasury auctions calendar

Wealth Engine researches and drafts with AI tools and checks every figure against the sources above. How we report.