Yields Rise After Rate Cut? US Long-Term Bond Yields Show "Abnormal" Trend

　　Following the Fed's restart of interest rate cuts, the US Treasury market has displayed an "anomalous" trend—short-end yields fell rapidly then rebounded slightly, while long-end yields unexpectedly rose instead of falling, leading to a steepening yield curve.
　　This phenomenon somewhat contradicts the historical pattern of broad bond market gains during preemptive rate-cutting cycles. Analysis points out that short-term rates are more directly impacted by rate cuts, while long-term rates are constrained by multiple factors including fiscal concerns, persistent inflation, and rising term premiums, resulting in a "dulled" reaction.

　　The future trajectory of US Treasuries will remain closely tied to the pace of Fed rate cuts. However, concerns about US debt sustainability coupled with policy uncertainty may continue to limit the downside for long-term yields.

　　After the Fed's rate cut was finalized, US Treasury yields have recently shown an overall volatile upward trend—yields on 1-year and shorter-term Treasuries fell sharply and rapidly immediately after the Fed's announcement. Yields on 2-year and 5-year Treasuries also declined but to a lesser extent, though all subsequently rebounded after some time.

　　The movement of 10-year and longer-term US Treasuries was more complex. After a brief decline following the rate cut, they quickly recovered and then rose for several consecutive days with significant gains. In mid-September, the 10-year Treasury yield fell below the 4% mark several times. However, after the September FOMC meeting, the 10-year yield climbed steadily. On September 25, it once rose to nearly 4.20% intraday. The 30-year Treasury yield rose from around 4.65% to above 4.76%, further steepening the yield curve.

　　A research report from Guotai Haitong Securities' Asset Allocation Department stated that because rate cut policies typically transmit more directly and quickly to short-term rates, the decline in their yields follows a "smoother" channel. In contrast, long-term yields are constrained by multiple factors including macroeconomic policies, economic recovery expectations, and complex transmission mechanisms, leading to a relatively "dulled" response to rate cuts. This situation where short-end yields fall faster than long-end yields, potentially even causing long-end yields to rise instead of fall, can drive the expansion of the term spread, further intensifying the steepening trend of the yield curve.