This is part of the Forward Guidance newsletter. To read the full editions, Subscribe.

Treasury yields rose again on Wednesday as US stocks struggled to recover from a rough day of trading yesterday.

The monthly auction of 10-year US Treasury bonds on Tuesday achieved the highest yield since 2007: 4.68%. Benchmark yields on 10-year bonds reached a high of 4.73% on Wednesday morning, a level not reached since last spring.

Zoom out, since the Fed began its interest rate cutting cycle In SeptemberThe yield on 10-year bonds rose from about 3.7% to 4.7%. It's an inverse correlation that's not typically seen, at least if you look at the past 10 easing cycles.

What does it give?

Well, first of all, we are not in a typical easing cycle. Typically, interest rate cuts indicate an approaching recession. This time, the Fed is cutting interest rates because central bankers believe inflation is too Back down enough - Or at least they did.

FOMC members' inflation expectations rose from 2.6% to 2.8% for 2024, and as such, their average expectations for federal funds rate cuts fell by 50 basis points. Futures markets now expect there is a 95% chance of central bankers keeping interest rates steady at their next meeting later this month.

Additionally, bond traders are reacting to the new (old) administration heading to the White House in less than two weeks. Today's selling (remember bond prices and yields move in opposite directions) is likely to be related to the rally Fears About the arrival of Trump Tariff policies.

So, it's a strange situation and there may be a reasonable explanation, but we're monitoring the situation. The minutes from the latest Fed meeting - due this afternoon - should give us more insight.

Start your day with the best cryptocurrency insights from David Kanellis and Katherine Ross. Subscribe to the Empire Newsletter.

Explore the growing intersection between cryptocurrencies, macroeconomics, politics, and finance with Ben Strack, Casey Wagner, and Felix Goffin. Subscribe to the Forward Way Newsletter.

Get alpha straight to your inbox with 0xResearch Newsletter — Market highlights, charts, trading ideas, management updates, and more.

The Lightspeed Newsletter has everything Solana, in your inbox every day. Subscribe to Solana Daily News By Jack Kopenick and Jeff Albus.