Interest rates are already falling
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The yield on the benchmark 10-year Treasury note plunged below 4% on Thursday — down more than a quarter of a point in the past week, and down more than 0.6 points from the end of May.
Why it matters: That's a significant easing of financial conditions — effectively a stealth rate cut ahead of the official rate cut that's all but certain in September.
The big picture: Long-term rates are much more important to the health of the economy than short-term rates. They govern how much you pay for your mortgage, as well as the amount it costs companies to invest in growth.
Where it stands: After a sharp fall in long-term rates at the end of 2023, they moved back up in the first half of 2024 as hopes of a Fed cut slowly evaporated.
- Now a series of rate cuts is being priced in — which means the 10-year Treasury note is trading well below the current fed funds rate of 5.33%.
