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Comment on Stocks Tank, Long-Term Treasury Yields Jump after Warsh Starts Talking by JeffD
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Comments for Wolf Street
The Fed’s policy rates bookend overnight rates, such as SOFR.
For example, floating-rate loans and Adjustable-Rate Mortgages that are in the adjustment phase are impacted by changes in the Fed’s policy rates via SOFR.
Short-term Treasury yields reflect a combination of current Fed policy rates and expected future policy rates within their window.
The Treasury market seems to be saying that as well… and that’s why we’re seeing a tightening both in nominal rates and in real rates.
Financial market prices, in this intervening period, didn’t pause.