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What Rate Cuts Mean for the Bond Market
It has been a month since the Fed cut interest rates by 25 basis points and brought the effective fed funds rate down to 4.11%. Prior to the meeting economists and financial analysts speculated that the ‘yield curve’ – a graphic representation of the difference in yields of Treasuries with maturities between two and thirty years - would steepen. A steepening of the yield curve would mean that as the Fed cut interest rates, those Treasuries with shorter maturities would have their yields fall more than the yields of the longer maturity Treasuries. The logic behind the analysis lies with the thought that the ... (full story)