Will Bond Yields Rise Again After The Fed Lowers Interest Rates Like They Did Last Year?

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Next week we are going to have one of the biggest moments for the markets this year, because the Federal Reserve is going to lower interest rates and we will see how the markets react to it.

We know lower interest rates are going to help to generate more inflation in time, because the CPI inflation rate already is ticking back up to 3%, but with the Federal Debt just growing and growing (DOGE failed), the Treasury Department has come to conclude that it needs lower rates to help fund future government bond sales.

The country has debt woes, and they have been building for some time. Over 14% of the US government budget is now going to interest on the debt.

That’s why last year when the Federal Reserve lowered interest rates long-term bond yields did something unusual and they went UP instead of DOWN.

Mortgage rates rose last year after the Fed cut rates, so the rate cuts did NOTHING to help consumers finance homes or their credit card debts.

I am sure that the Federal Reserve managers did not expect or want this to happen.

Take a look at the chart below.