New World Investment Research

As the Fed is expected to cut rates on Wednesday, the direction of yields in the bond market appears to be unusual.

Even though the U.S. regulator has already delivered several rate cuts this year and is poised to cut further, Treasury yields have kept pushing higher.

This divergence represents a debate on whether the Fed should actually cut rates now. The US economy is very K-Shaped with rich and AI giants increasing expenditure and fueling growth, while low-income households experience a recession. Markets are effectively questioning whether monetary easing aligns with these underlying realities and whether it might lead to the economy overheating.