In physics, what goes up must come down. But in finance, that’s not always the case.
With interest rates, for example, some short-term rates have been trending downward, such as with the Federal Reserve starting to cut the federal funds rate. Meanwhile long-term ones such as 10-year Treasuries or 30-year mortgages have remained relatively high or even increased in recent months.
Typically, different types and terms of interest rates are correlated. They might not move in lockstep, but the general direction is often consistent. Lately, however, there’s been a split.
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What’s happening with interest rates?
In September, the Federal Reserve cut the federal funds rate (the cost for banks to borrow from one another, often overnight) by 50 basis points, followed by a 25 basis points cut in November, as it tries to loosen the strings that were tightened to fight inflation.
As the Fed cuts, some long-term interest rates are rising
