Rates

September’s long-awaited rate cut was supposed to bring relief, but long-term rates are proving stubborn. Treasury yields are not sliding the way many expected, and here is why: Washington is flooding the market with new debt. The government keeps issuing bonds to fund massive deficits, and that supply eats up investor demand.

Even when the Fed cuts, heavy issuance pushes yields right back up—keeping borrowing costs for mortgages, businesses, and retirees higher than hoped. This is the tug-of-war between monetary policy and fiscal reality.

Today’s ten-year Treasury auction is the test. If foreign buyers step in with strength, yields may ease. If not, stubbornly high long-term rates could be the new normal—reminding us that the bond market is not just about Fed policy, but about global appetite for America’s growing mountain of IOUs.

Think about it: rate cuts grab headlines, but debt issuance drives the long game.