Analysis: The Federal Reserve is losing control over interest rates, with the 30-year Treasury yield rising to nearly 5%

ChainCatcher news, The Kobeissi Letter has released the latest market analysis indicating that the Federal Reserve will cut interest rates for the first time in 2025 in 15 days, but the yield on the 30-year U.S. Treasury bond is currently close to 5.00%, a level that is the same as during the largest financial crisis in U.S. history in 2008.

As the market prepares for rate cuts, interest rates are actually rising. The U.S. deficit spending has spiraled out of control, and the Federal Reserve is losing control over interest rates, having issued over $200 billion in bonds in just five weeks. We are at a stage where investors are simply unwilling to buy U.S. government bonds at the current yields.

The "term premium" on the U.S. 10-year government bond, which is the additional yield required by investors for holding long-term bonds, typically due to the "perceived risk" of holding these bonds, is close to its highest level since 2014. Meanwhile, with only two weeks until the rate cut, the core inflation rate in the U.S. has risen above 3% and is on an upward trend. With an annual inflation rate of 3%, the dollar will lose over 25% of its purchasing power over the next 10 years.

Since 2020, it has already lost about 25%, and inflation continues to rise. In two weeks, the Federal Reserve will cut rates and "blame" the weak labor market. The unemployment rate for young Americans aged 16 to 24 is as high as 10%. The labor market is weakening, inflation is rising, and stagflation has arrived.