More interest-rate cuts next year — little to no effect on long-term rates

There will be more interest-rate cuts next year — and these reductions will have little to no effect on long-term rates

Longer-term bonds are more affected by market forces. Their yields reflect expected future inflation, inflation risk, and a risk premium for holding an asset with more price variability than a short-term bond.

Inflation appears to be holding steady at 3%, yet the Fed has already started easing by cutting rates and ending quantitative tightening. 

A stubbornly high 10-year rate will no doubt frustrate many politicians, not to mention central bankers. It means mortgage rates won’t go down, makes servicing the national debt more expensive, and raises the likelihood of a “credit event” as firms’ debt comes due and they can’t afford to refinance.  

Alternatively, the economy might just slow down, exposing the ineffectiveness of the Fed’s monetary policy.

Allison Schrager Bloomberg December 15, 2025

https://www.bloomberg.com/opinion/articles/2025-12-15/fed-interest-rate-cuts-the-bond-market-will-not-be-fooled 

Here’s what happened while America was busy with Fed meetings.

https://englundmacro.blogspot.com/2025/12/heres-what-happened-while-america-was.html