There has been quite a lot of talk about reducing interest rates as of late, however, as Robin Brooks of the Brookings Institute points out today, despite a global easing cycle, long-term rates continue to move higher. As seen below, 30-year yields (red line) are rising while the anticipated level of policy rates (blue line) moves lower across major economies. This is due to the fact that bond market investors and not central bankers ultimately determine the appropriate level of yields. And right now, rising inflation, high government debt loads, and large quantities of government debt issuance are causing investors to demand higher yields. As a reminder, when the Fed cuts rates, even by large amounts, yields don’t also follow suit. In the fall of 2024, the Fed cut rates by 100 basis points from September to December, yet the 10-year treasury yield increased meaningfully as seen in the chart from Apollo.
August 27, 2025
There has been quite a lot of talk about reducing interest rates as of late, however, as Robin Brooks of the Brookings Institute points out today, despite a global easing cycle, long-term rates continue to move higher. As seen below, 30-year yields (red line) are rising while the anticipated level of policy rates (blue line) moves lower across major economies. This is due to the fact that bond market investors and not central bankers ultimately determine the appropriate level of yields. And right now, rising inflation, high government debt loads, and large quantities of government debt issuance are causing investors to demand higher yields. As a reminder, when the Fed cuts rates, even by large amounts, yields don’t also follow suit. In the fall of 2024, the Fed cut rates by 100 basis points from September to December, yet the 10-year treasury yield increased meaningfully as seen in the chart from Apollo.