The Federal Reserve cut interest rates by an “historic” 50 basis points. Then, interest rates soared.
Wait. What?
The Federal Funds Rate is a target (technically a target range) that influences short-term rates in the economy. Money market funds, for example, pay interest based on this benchmark. They pay 0.5% less today than two months ago due to the Fed cut.
Long-term rates, on the other hand, are not controlled by the Fed. Not directly, at least. The global bond market is a cool $130 trillion. Far too large for anyone, even Uncle Sam, to control.
Hence the recent fixed-income paradox.… Read more
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