Why Price of 10Y Bonds went up Post-Cut

Can anyone succinctly explain why this happened? I am referring to September cut.

From what I have read online it is because the cut was already “priced in,” but obviously this does not tell the full story.

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no exact answer here but few channels or frameworks to think through:

  • higher long term inflation expectations. off the back of less soft data in labour market & some bumps in disinflationary progress market thinks Fed will need to be less dovish in order to achieve its dual mandate on inflation + unemployment
  • Trump election odds re-pricing, and with it tariff & fiscal risk. Trump odds higher, market expects tariffs under Trump which are inflationary (therefore 10Y higher). also re-pricing of Trump + red sweep scenario, which increases likelihood of fiscal policy as needs non-split Congress to pass (inflationary and will mean higher rates as a result)
  • fiscal slippage fears relating to deficit. 10Y pricing in concern/premium over expectation for widening deficit/GDP - higher 10Y/long end yields to factor for this
 

yeah. generally speaking, upside inflation risks / higher rates being priced = higher yields and given yields move inversely to bond prices, lower bond prices

 

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