For a smooth projective variety X with exceptional structure sheaf, and X [2] the Hilbert scheme of two points on X , we show that the Fourier-Mukai functor D b (X ) → D b (X [2] ) induced by the universal ideal sheaf is fully faithful, provided the dimension of X is at least 2. This fully faithfulness allows us to construct a spectral sequence relating the deformation theories of X and X [2] and to show that it degenerates at the second page, giving a Hochschild-Kostant-Rosenberg-type filtration on the Hochschild cohomology of X . These results generalise known results for surfaces due to Krug-Sosna, Fantechi and Hitchin. Finally, as a byproduct, we discover the following surprising phenomenon: for a smooth projective variety of dimension at least 3 with exceptional structure sheaf, it is rigid if and only if its Hilbert scheme of two points is rigid. This last fact contrasts drastically to the surface case: non-commutative deformations of a surface contribute to commutative deformations of its Hilbert square.