Prices slumped as the market believes the Fed's rate cuts will result in higher inflation
From Standard & Poor's Equity ResearchS&P MARKETSCOPE: Treasuries suffered an enormous sell-off as a slide in the dollar, the resulting jump in gold futures, and record-high WTI crude oil above $83 a barrel stoked inflation fears, just two days after the Fed cut by 50 basis points its target on the federal funds rate, as well as on the discount rate.
The 10-year note dropped 40/32 to 100-13/32 for a yield of 4.70%. The 30-year plummeted 65/32 to 100-17/32 for a yield of 4.96%.
Sentiment has started to swell that the Fed's 50 basis points cuts were egregious since inflation is still a problem. Stocks were weak today amid lower volume, so this was not a case of an asset allocation shift.