Fed Cuts Rates. Long Bonds Rise Anyway.

U.S. 30-year yields reached 5.16% on May 18, the highest since 2023, even as the Fed cut its policy rate to 3.9% in late 2025. This divergence—short rates falling, long rates rising—points to term-premium repricing tied to fiscal supply and persistent inflation, not Fed policy itself. The bond market is pricing in structural economic headwinds the rate cuts don't address.