Jin10 data reported on August 15th that investors and Trump should not expect the Fed’s interest rate cuts to lower the yield on 10-year U.S. Treasury bonds. While DataTrek’s research found that when the Fed lowers the policy interest rate, the 10-year Treasury yield does indeed drop, the situation is different if the interest rate cut occurs without an economic recession. Although signs of a weakening U.S. economy are emerging, the market currently believes that there are no signs of a recession yet. Interest rate futures prices indicate that investors believe the Fed will almost certainly lower rates in September. Against this backdrop, the yield on 10-year U.S. Treasuries may not change. This is not good news for those applying political pressure on the Fed to lower interest rates.
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