Confirmed! This is the largest increase in U.S. Treasury yields after the Federal Reserve's first rate cut in history!
U.S. Treasury yields saw the largest historical increase after the Federal Reserve's first rate cut, particularly with the 10-year bond yield breaking the 2024 high, approaching the 5% cycle peak from November 2023. The rise in yields is primarily driven by real yields and term premiums, rather than inflation. The performance of U.S. stocks may be influenced by Trump's policies, but the stability of interest rates remains a key variable
So far this year (actually since Powell's December meeting shifted to a clear focus on inflation), the rise in U.S. Treasury yields may disrupt the narrative of U.S. stocks. The yield on the 10-year U.S. Treasury bond is currently well above the top of the 18-month downward channel, breaking through the 2024 high and approaching the cyclical high of 5% from November 2023.
This is the largest increase in yields observed after the Federal Reserve's first rate cut.
The composition of interest rate changes is noteworthy, primarily driven by real yields and term premiums rather than inflation.
For U.S. stocks, Trump's inauguration and early policy actions may be crucial, but even so—I suspect where interest rates ultimately stabilize will remain a key variable at present