There’s No Guarantee The Fed’s Rate Cuts Will Lower The Rates That Matter

Article Synopsis

Despite the Fed cutting rates by 1.5 percentage points since last fall and signaling more easing ahead, Treasury yields have risen instead of falling, defying the usual relationship between monetary policy and borrowing costs. Analysts say this divergence reflects a mix of factors, including trade policy uncertainty, rising federal deficits, and investor demands for higher compensation amid perceived policy risk. 

More pessimistic views suggest markets may be pushing back on continued rate cuts while inflation remains elevated, while optimistic interpretations point to confidence in a soft landing or a return to pre-2008 “normal” interest rate levels. The result is a reminder that even with Fed easing, there’s no guarantee mortgage rates or other key borrowing costs will decline.

Click Here To Read Full Article