Long-end Treasury yields went up this week, even though the Fed cut interest rates. That move surprised the bond market. The 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 year. That helped push stocks higher, but the bond market didn’t react the same way.
According to Bloomberg, investors in longer-term bonds didn’t get what they wanted — certainty that inflation would stay under control.
Peter 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 signal. He said the Fed…
