Short-Term Treasury Market Walks Away from Rate-Cut Mania, Inflation Has Upper Hand

By Wolf Richter –  WOLF STREET

From mid-October through the end of January, the 6-month Treasury yield had dropped by about 43 basis points, from around 5.58% to 5.15% (green box in the chart below). This means roughly, that at the end of January, the 6-month yield – a calculated composite representing securities with about six months left before they mature – saw two rate cuts within its six-month window, spread over the three FOMC rate announcements on March 20, May 1, and June 12. So roughly two rate cuts by the June meeting.

But since then, the 6-month yield has risen by 23 basis points, to 5.38% today, which is right in the middle of the Fed’s target range for the federal funds rate of 5.25% to 5.50%.