Rates & Yield Curve
Why can bond yields fall after a central bank hikes rates?
A hike can convince investors that inflation will be contained or that tighter policy will slow future growth. Those expectations can pull longer-maturity yields lower even while the overnight policy rate rises.
How to read it
The front end usually reflects the current policy path most directly; the long end can trade the consequences of that policy for growth and inflation.
Watch the policy-rate path, front-end OIS pricing, the 2s10s or equivalent curve shape, inflation expectations and the central bank’s own communication. Together they show whether markets are repricing the current decision, the next cycle, or the credibility of the framework.
Central-bank effects are regime-dependent. The same policy action can produce different market outcomes when inflation, growth, positioning or prior expectations differ.