US Treasury Yields Rise Following Fed's September Rate Cut

According to BlockBeats, as of October 23, the yield on two-year U.S. Treasury bonds has increased by 34 basis points since the Federal Reserve implemented its first rate cut since 2020 on September 18. Historically, similar trends were observed in 1995 when the Fed, under Alan Greenspan's leadership, managed to cool the economy without triggering a recession, resulting in a comparable rise in yields. Conversely, during rate cut cycles before 1989, the two-year Treasury yield typically fell by an average of 15 basis points within a month of the Fed's initial rate cut. Deutsche Bank's rate strategist Steven Zeng noted that the rise in yields reflects a reduced likelihood of an economic recession. He stated, 'The data is quite strong. The Fed may slow down the pace of rate cuts.' Additionally, the recent increase in yields indicates the resilience of the U.S. economy and the buoyancy of financial markets, which limit Federal Reserve Chairman Jerome Powell's options for aggressive rate cuts. Interest rate swap trading shows that traders now expect the Fed to cut rates by 128 basis points by September 2025, compared to 195 basis points anticipated a month ago.