Treasury yields are higher this morning as they’ve been seemingly every day since the Federal Reserve cut rates in mid-September.  At 4.15%, the yield on the 10-year US Treasury has risen to its highest level since late July, and since the close on 9/17, the day before the Fed’s 50 basis point (bps) cut, the 10-year’s yield has risen on 15 of the 23 trading days (65%). Wasn’t the rate cut supposed to lower rates?

Given the sharp increase in Treasury bond yields since the September rate cut, we were curious how the current increase stacks up to moves in the 10-year yield following prior rate cuts from the Fed. Going back to 1994 when the Federal Reserve first started to announce its policy decisions on the day of their meetings, there have been 35 rate cuts (scheduled and unscheduled). Below, we show the change in the 10-year yield in the 34 calendar days (equivalent to the number of days since the most recent cut) from the close on the day before each cut.

With the 10-year yield now up 51 bps since the close the day before September’s cut, the current period ranks as the third largest since 1994. The only two cuts that were followed by a larger increase in yields were in June 2003 (103.1 bps) and November 2001 (87.1 bps), and the next closest was in March 2001 when the 10-year yield increased 47.5 bps.  For all 35 rate cuts since 1994, the median change in the 10-year yield was a decline of 3 bps, and the 10-year yield increased 15 times (43%).

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Welcome to Bespoke Brunch Reads — a linkfest of some of our favorite articles over the past week. The links are mostly market-related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

If you haven’t had a chance to listen yet, Paul Hickey joined Schwab’s On Investing with Liz Ann Sonders and Kathy Jones. Click the image below to listen.

Sails of Sydney: After fourteen years of construction, the Syndey Opera House officially opened on October 20th, 1973. The world-famous architectural masterpiece on Bennelong Point in Sydney, Australia, was designed by Danish architect Jørn Utzon. His design was revolutionary for its time, incorporating a series of precast concrete shells that evoke the image of sails in the Sydney Harbor. The unique shape presented big structural issues, and Utzon resigned in 1966 before the project was ultimately finished. When the opera house finally opened, the ceremony was attended by over 1 million people and broadcast globally with fireworks displays, a speech by Queen Elizabeth II, and a performance of War and Peace. Since its opening, the Sydney Opera House has become a premier performing arts venue, hosting over 1,500 performances annually and drawing millions of visitors worldwide.

Population Trends

Worldwide Efforts to Reverse the Baby Shortage Are Falling Flat (WJ)
Even with perks like cheap loans, tax breaks, and paid leave, Europe’s efforts to boost birth rates aren’t working. In places like Hungary and Norway, where the government throws serious money at families, people still choose to have fewer kids. Much of it seems to come down to personal decisions regarding lifestyle, careers, and not feeling like having kids is the right move. So even with all these benefits, the cultural shift toward smaller families is sticking, and throwing more cash at the problem isn’t changing things. [Link]

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