Financial FitnessGeneral Information

What Does the Fed’s Cut Mean?

By October 24, 2019 No Comments

On July 31st of this year, the Federal Reserve cut their interest rate known as the Fed funds rate, by a quarter of a percent. This is the first cut we have seen since December of 2008.

According to the Federal Reserve’s website, the last rate cut by the Federal Reserve lasted from September of 2007 through December of 2008, which was a total of 15 months. During that period of time, the Federal Reserve cut its key short-term rates by five percentage points from a peak of 5.25% all the way down to 0.25%.

What has the recent rate cut done to the overall treasury market. According to the Treasury Department, the yield on the U.S. Treasury 10-year note fell to 1.52% on August 26th, which is the lowest levels since October of 2016. The all-time record low for the 10-year Treasury was 1.36% back in July of 2016.

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