How Federal Reserve Rates Affect Treasuries
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Fed funds steer the front end. QT, RRP and SOMA holdings also matter for longer yields.
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How Federal Reserve Rates Affect Treasuries — the mechanics
When the FOMC reprices the dots, 2-year notes jump. 10-year and 30-year yields also move with expected inflation and the term premium, which the Fed does not set with a single vote.
The federal funds rate is overnight. SOMA holdings and QT/QE affect term premia. Forward guidance moves the 2-year more than the 30-year, most of the time.
A 25bp hike that is already fully priced may move bills a little and 10-year notes not at all. A hike that is a hawkish surprise moves the whole curve.
Do not confuse the Fed’s administered rates with the 10-year. One is policy; the other is a market.
Official sources (US Treasuries)
Primary statistics and prospectuses for US Treasuries are published by the issuer, not by this newsroom. The labelled links at the end of this page go to those official sites (DMO, TreasuryDirect, Finanzagentur, MEF, AFT, SNB or ECB as relevant).
Our live board is a teaching overlay: dated prints, named sources, estimated ISIN lines. It is not a replacement for the issuer’s calendar.
Viktige punkter
- The federal funds rate is overnight.
- Prices and yields change. When this site quotes them, it dates them on the live board.
- Credit of a G7 government in its own currency is not the same as a stable screen price, and not the same as a bank deposit.
FAQ
- Does a Fed cut guarantee higher bond prices?
- Not if the cut is already priced, or if long-term inflation expectations rise at the same time.