Fed and bond market are on different pages about interest rates: chart
Longer-duration yields that help finance the U.S. economy have been drifting higher since the Federal Reserve cut short-term interest rates in September.
The mismatch likely reflects “a higher terminal rate when the Fed is done cutting,” according to Chris Low, chief economist at FHN Financial.
It also likely reflects concerns about potential inflationary policies in the year ahead, along with inflation moving “sideways,” the Fed cutting rates anyway and an elevated Treasury supply, he said.