The long-awaited interest rate cuts from the Federal Reserve in the final months of 2024 aimed to lower borrowing costs. Bond markets are refusing to cooperate, however, as last week’s fixed-income sell-off carried into Monday. The yield on the benchmark 10-year Treasury, which rises as the price of the bond falls, briefly surged above the 4.8% mark Monday morning, its highest level since November 2023, while its 30-year counterpart is on the cusp of hitting 5%. Those rising rates will in turn carry over to the cost of mortgages and loans of all sorts.
A big reason for all this is last week’s blowout jobs report, which left Wall Street wondering whether the Fed will continue its rate-cutting regime in 2025. Meanwhile, on the cusp of Donald Trump’s inauguration, there are fears the President-elect’s policies on tariffs, tax cuts, and mass deportations could prove inflationary. Whatever the case, a steepening yield curve is weighing on stocks, and some market watchers are eyeing bonds as a potential opportunity for investors.
