The 2-year Treasury yield drops below 5% following the Federal Reserve's decision to maintain interest rates.

After the Federal Reserve left rates unchanged for a second consecutive meeting and upgraded its assessment of the economy, the yield on the 2-year Treasury note dropped below the 5% mark.

The 2-year Treasury yield decreased by 11 basis points to 4.96%, while the yield on the 10-year Treasury also decreased by 11 basis points to 4.766%.

Prices and yields move in opposite directions. A basis point is equivalent to 0.01%.

The Fed policy committee announced that the central bank kept interest rates unchanged and maintained the key federal funds rate at 5.25%-5.5% set in July. In a statement following the meeting, the committee noted that gains in the labor market have moderated since earlier in the year but remain strong, while economic activity expanded at a strong pace in the third quarter.

Chairman Jerome Powell during a press conference following the decision left the door open to another potential hike, indicating that the Fed wouldn't rule out a hike in December. He also shut down the belief that it may be difficult to hike rates following two consecutive pauses.

Despite some progress, inflation remains too high, as Powell recently reiterated the central bank's commitment to bringing it back down to the 2% target. The latest consumer price index for September showed a 3.7% rise on an annual basis.

Rajeev Sharma, managing director of fixed income at Key Private Bank, stated that the "Higher for Longer" narrative by the Fed will keep front end rates high until the end of the year, and the yield curve will continue to move towards finally un-inverting. He also pointed out that 2-Year Treasury yields have decreased by 10bps, indicating that the Fed recognizes that tighter financial conditions may negatively impact economic activity.

On Wednesday, two labor market reports hinted at a slight decline in jobs, while a manufacturing survey in October exceeded economists' expectations and fell more than anticipated.

The Treasury Department unveiled details on upcoming bond sales amid growing concerns about the U.S. government's debt burden. The plan aligned with traders' expectations, as the Treasury announced it would auction $112 billion in debt next week.

— CNBC’s Jeff Cox contributed to this report.