CUT CONUNDRUM

Since 1980, there have been nine Fed easing cycles. Across those cycles, the Fed funds rate reduction averaged 232bps and the reduction in the 10-year Treasury averaged 72bps. Around a recession, cuts averaged 400bps and the decline in the 10yr-Treasury averaged 156bps. But outside of a recession, Fed funds cuts averaged 97bps and the slide in the 10yr-Treasury was just 6bps. A recession is key to getting the 10Yr-treasury down.