The Fed controls an overnight policy rate. The 10-year Treasury yield reflects what investors expect—and the risks they price—over a much longer period. The Short Answer A Fed rate cut does not require the 10-year Treasury yield to fall. The Federal Reserve lowers its target for an overnight interest rate, while investors price a 10-year Treasury using expectations for short-term rates over the coming decade plus a term premium. If markets come to expect fewer future cuts, stronger growth, more persistent inflation or greater long-term risk, the 10-year yield can rise even as the Fed cuts today.
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