Rates & Yield Curve
Why can bond yields rise after a central bank cuts rates?
Because a rate cut changes only the very short policy rate directly. Longer yields also embed expected future policy, inflation, growth, term premium and bond supply. If a cut reduces recession risk or makes investors expect firmer nominal growth, the long end can rise even as the central bank eases.
How to read it
Separate the immediate policy move from the repricing of the future path. A steeper curve after a cut can therefore be consistent with easier policy rather than a contradiction.
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.