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federal reserve rate cuts

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Treasuries: The Yield Curve Has Normalized After Two Years of Inversion — What the 60-Basis-Point Spread Signals for Bonds, the Fed, and Your Portfolio

After spending more than two years inverted — the longest stretch in modern history — the US Treasury yield curve has decisively normalized. The 10-year Treasury yield stood at 4.08% on February 19, 2026, while the 2-year note yielded 3.47%, producing a positive spread of 61 basis points. That gap has narrowed from 74 basis points just two weeks earlier, but the broader story remains: the curve is no longer flashing the recession warning that dominated bond market commentary from mid-2022 through most of 2025. The normalization has been driven by the Federal Reserve's rate-cutting campaign. After holding the federal funds rate at 4.33% for five consecutive months through July 2025, the Fed began easing in the autumn, bringing the rate down to 3.64% by January 2026 — a cumulative 69 basis points of cuts. Short-term Treasury yields have followed the policy rate lower, while long-term yields have declined more gradually, reflecting persistent fiscal concerns and inflation expectations that remain above the Fed's 2% target. For bond investors, this represents a meaningful shift in the opportunity set. The days of earning higher yields on short-term bills than long-term bonds are over. The question now is whether the normalization signals that the recession the inverted curve was supposedly predicting has been avoided entirely — or is merely delayed.

treasury yieldsyield curvefederal reserve rate cuts

Treasuries: Tariff Turmoil Sends Investors Rushing to Bonds as Supreme Court Strikes Down Trade Levies

The US Treasury market is digesting one of the most consequential trade policy shifts in decades. After the Supreme Court struck down President Trump's reciprocal tariff regime on February 20, 2026, bond yields initially dipped as markets processed the implications of reduced trade barriers — only for Trump to announce plans to raise global tariffs to 15%, reigniting uncertainty. The 10-year Treasury yield sits at 4.08% as of February 19, having fallen more than 20 basis points from its early-February high of 4.29%. The whiplash in trade policy has created a fascinating push-pull dynamic in the bond market. On one hand, the court ruling removes a significant inflationary impulse from reciprocal tariffs, which should be bond-friendly. On the other, Trump's defiant response threatens to reimpose price pressures through a different mechanism. Meanwhile, the Federal Reserve has already cut the federal funds rate to 3.64% in January 2026 — its fourth consecutive reduction — and investors are watching closely to see whether the tariff chaos delays or accelerates the next move. Across the curve, yields have declined sharply from their February peaks. The 2-year note at 3.47%, the 10-year at 4.08%, and the 30-year bond at 4.70% all reflect a market that is pricing in slower growth, moderating inflation expectations, and continued monetary easing — even as fiscal and trade policy remain deeply uncertain.

US Treasury bondsTreasury yieldsSupreme Court tariffs

Gold: Trade Policy Chaos and Fed Easing Cycle Reinforce Safe-Haven Demand Above $5,000

Gold futures surged 1.7% on Friday to $5,081, reclaiming the $5,000 level convincingly as a confluence of trade policy upheaval and continued Federal Reserve easing underpinned demand for the world's oldest safe-haven asset. The precious metal touched an intraday high of $5,131, drawing fresh buying interest after the U.S. Supreme Court struck down the administration's reciprocal tariff regime — only for President Trump to announce plans for a blanket 15% global tariff, reigniting trade uncertainty. The backdrop for gold has rarely been more constructive. The Federal Reserve has cut rates from 4.33% to 3.64% over the past year, real yields are compressing, the U.S. dollar has weakened from its early-February highs, and inflation remains sticky above the Fed's 2% target. Gold is now trading 6.5% above its 50-day moving average of $4,773 and a remarkable 26% above its 200-day average of $4,030 — a textbook momentum breakout that continues to attract trend-following capital. For investors weighing gold's role in a diversified portfolio, the current environment presents a rare alignment of structural and cyclical tailwinds. The question is no longer whether gold belongs in portfolios, but how much weight it deserves as trade policy instability and monetary easing reshape the macro landscape.

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