Yields up, rates down 

Futures markets are now pricing in a 95% chance central bankers hold rates steady at their next meeting later this month

article-image

Deacons docs/Shutterstock modified by Blockworks

share


This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


Treasury yields were once again on the rise Wednesday while US equities struggled to recover from a rough day of trading yesterday. 

The US government’s monthly 10-year Treasury note auction on Tuesday drew the highest yield since 2007: 4.68%. Benchmark yields on 10-years hit a high of 4.73% Wednesday morning, a level not hit since last spring.

Zooming out, since the Fed started its rate-cutting cycle in September, yields on 10-year notes have increased from around 3.7% to 4.7%. It’s an inverse correlation not typically seen, at least if you look back upon the past 10 easing cycles. 

What gives? 

Well, first of all, we aren’t in a typical easing cycle. Normally, rate cuts signal an approaching recession. This time, the Fed is lowering interest rates because central bankers believe inflation is sufficiently declining — or at least, they did.

FOMC members’ inflation expectations have risen from 2.6% to 2.8% for 2024, and as such, their median projections for cuts to the fed funds rate has decreased by 50 basis points. Futures markets are now pricing in a 95% chance central bankers hold rates steady at their next meeting later this month. 

Plus, bond traders are reacting to the new (old) administration headed for the White House in less than two weeks. Today’s selloff (remember, bond prices and yields move in opposite directions), is likely linked to rising concerns about Trump’s incoming tariff policies.  

So, it’s a strange situation with perhaps a reasonable explanation, but we’re keeping an eye on the situation. The latest Fed minutes — set to be released this afternoon — should also give us more insight.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.png

Research

Content Delivery Networks (CDNs) represent low-hanging fruit in a massive market ripe for Web3-driven disruption. The global CDN market was valued at ~$28B in 2024, and is projected to surpass $140B by 2034, (18.75% CAGR) underscoring the immense demand for efficient content delivery.

article-image

US dollars might technically be worth less, but it’s still good news

article-image

Apps are doing well, as is casino gaming, says Tom Schmidt of Dragonfly

article-image

Sponsored

Machine DeFi brings programmable peer-to-peer finance into contact with tangible machines that generate real-world value

article-image

What happens to your investment portfolio when the companies driving returns are no longer in it?

article-image

Wow, the ETF hype sure didn’t last long

article-image

The private sector lost 33,000 jobs in June; analysts had projected payrolls to add 100,000 positions