You're right, I should have been more clear in that I meant a local compromise of the machine running the password manager client, not the server running the password manager itself. If my sessions and all of my data can be intercepted, the yubikey 2fa seems like it's only saving me from a token "nobody can login remotely to this one service" which at that point seems pretty moot

Yubikey offers a false sense of security in that regard, unfortunately, because if your device is thoroughly 0wned and you don't know it, the attacker "just" has to wait for the victim to do something that would trigger the yubikey, and then swap in their forged request instead. Eg if the victim uses the yubikey to log into bank1 and to crypto wallet, but bank1 accounts have no money, instead of waiting for the customer to log into their crypto wallet with the yubikey, the attack software waits for the victim to log into bank1, but swaps in a request to the crypto wallet instead.