Fed's rate cut meets resistance as long-end Treasury yields reverse lower trend

Long-end Treasury yields went up this week, even though the Fed cut interest ￰0￱ move surprised the bond ￰1￱ 10-year Treasury yield, which had dipped below 4%, jumped to 4.145%. The 30-year yield, the one that matters for mortgages, rose to 4.76%, after hitting a weekly low of 4.604%. The Fed lowered its policy rate by 0.25% to 4.00%-4.25% on Wednesday, its first rate cut of the ￰2￱ helped push stocks higher, but the bond market didn’t react the same ￰3￱ to Bloomberg, investors in longer-term bonds didn’t get what they wanted — certainty that inflation would stay under ￰4￱ Boockvar, chief investment officer at One Point BFG Wealth Partners, said traders used the Fed’s move to take profits, calling it a chance to “sell the news.” Peter said people holding long bonds “don’t want the Fed to be cutting interest rates.” When traders dump those bonds, prices go down and yields rise.

That’s exactly what happened. Powell’s ‘risk management’ cut faces doubts from bond traders Peter pointed out that easing monetary policy while inflation is above 3% — and while the economy’s still solid — sends a risky ￰5￱ said the Fed might be “taking the eye off” ￰6￱ Fed projections released on Wednesday show officials now expect inflation to rise slightly next year. That’s not what bondholders wanted to ￰7￱ had hoped the Fed would move its focus away from inflation and toward jobs, especially after weak employment numbers earlier this ￰8￱ Powell described the cut as a “risk management” move, mentioning the slowing labor ￰9￱ Peter said , “The bond market, if longer yields continue higher, would be sending a message that, ‘We don’t think you should be aggressively cutting interest rates with inflation stuck at 3%.’” He also explained that this week’s jump in yields came after bond prices had already been rising for ￰10￱ had fallen, but now they’re moving back up — just like they did after the Fed’s cut in September ￰11￱ said it’s worth noting that the 10-year yield hasn’t moved much since the start of the year, even though the Fed has cut rates more than once since ￰12￱ yields aren’t just bad news for ￰13￱ affect everything from home loans to car ￰14￱ rates rose after the Fed’s cut, wiping out the gains from their three-year low earlier in the ￰15￱ hit ￰16￱ Thursday, homebuilder Lennar reported disappointing revenue for the third quarter and warned that deliveries would be weak in the next one.

Co-CEO Stuart Miller blamed “continued pressures” in the housing market and “elevated” interest rates through ￰17￱ market waits for terrible news before buying again Chris Rupkey, chief economist at FWDBONDS, said the bond market doesn’t move on one rate ￰18￱ said, “It’s not the journey, it’s the destination.” What matters is how far the Fed plans to ￰19￱ said traders are trying to figure out “what’s the end game in this?” and that they’ll only respond once they’re convinced the Fed is serious about cutting rates ￰20￱ added that ￰21￱ also follow what’s happening ￰22￱ said international rates have been rising, too, so foreign central bank actions matter ￰23￱ Chris had a warning for anyone rooting for lower ￰24￱ said falling yields usually mean a recession’s ￰25￱ week’s yield jump came right after jobless claims fell, which shows less risk of a downturn anytime ￰26￱ said, “Don’t rejoice so much about getting bond yields down, because it may mean that it’s impossible for you to find work.” He also added, “Unfortunately, the bond market only really embraces bad ￰27￱ just bad news … terrible news.” The smartest crypto minds already read our ￰28￱ in?

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