Part 4/9:
Given the current economic climate, Trump and Treasury Secretary Scott Bessent have pivoted towards a focus on lowering the benchmark 10-year Treasury yield instead of pressuring the Federal Reserve to cut interest rates directly. The 10-year yield serves as a critical reference point for various types of lending, including mortgages, and directly affects the costs associated with borrowing.
Lenders assess risk based on the 10-year yield when determining interest rates for other debts. If the yield is high, lenders would charge borrowers higher rates to preserve their purchasing power in an inflationary environment. Conversely, a lower yield would energize lending by making it less risky and less costly for consumers to borrow, hence increasing spending and stimulating economic growth.