Business
Which Interest Rate Should You Care About?
Watch out for interest rates.
Not the short-term rates controlled by the Federal Reserve. Barring an unforeseen financial crisis, they’re not going anywhere, especially not after the jump in inflation reported by the government on Wednesday.
Instead, pay attention to the 10-year Treasury yield, which has been bouncing around since the election from about 4.8 to 4.2 percent. That’s not an unreasonable level over the last century or so.
But it’s much higher than the 2.9 percent average of the last 20 years, according to FactSet data. At its upper range, that 10-year yield may be high enough to dampen the enthusiasm of many entrepreneurs and stock investors and to restrain the stock market and the economy.
That’s a problem for the Trump administration. So the new Treasury secretary, Scott Bessent, has stated outright what is becoming an increasingly evident reality. “The president wants lower rates,” Mr. Bessent said in an interview with Fox Business. “He and I are focused on the 10-year Treasury.”
Treasuries are the safe and steady core of many investment portfolios. They influence mortgages, credit cards, corporate debt and the exchange rate for the dollar. They are also the standard by which commercial, municipal and sovereign bonds around the world are priced.
What’s moving those Treasury rates now is bond traders’ assessments of the economy — including the Trump administration’s on-again, off-again policies on tariffs, as well as its actions on immigration, taxes, spending and much more.
Mr. Bessent, and President Trump, would like those rates to be substantially lower, and they’re trying to talk them down. But many of the president’s policies are having the opposite effect.
The president needs the bond market on his side. If it comes to disapprove of his policies, rates will rise and the economy — along with the fortunes of the Trump administration — will surely suffer.
Treasuries, not Fed Rates
Mr. Bessent may be focusing on Treasury rates, or yields, partly to relieve pressure on the Federal Reserve, which President Trump frequently berated in his first term and on the campaign trail.
The Fed’s independence is sacrosanct among most economists and many investors. During the campaign, Mr. Trump repeatedly called on the Fed to lower rates. Yet any threat to the Fed’s ability to operate freely could panic the markets, which, clearly, is not what Mr. Trump wants.
To the contrary, when the markets are strong, he frequently cites them as a barometer of his popularity. In 2017, he boasted about the performance of the stock market an average of once every 35 hours, Politico calculated.
Shortly after the November election, I wrote that the markets might restrain some of Mr. Trump’s actions. But I wouldn’t go too far with this now. Few government departments or traditions seem to be off limits for the administration’s aggressive changes in policy or reductions in work force, masterminded by Mr. Trump’s sidekick, the billionaire disrupter-in-chief, Elon Musk. Just look at The Times’s running tabulation of the actions taken since Jan. 21. It’s dizzying.
Still, so far, at least, the administration has been remarkably circumspect when it comes to the Fed. That doesn’t mean President Trump has entirely constrained himself: He has continued to mock the Fed, saying in a social media post that it has “failed to stop the problem they created with Inflation” and has wasted its time on issues like “DEI, gender ideology, ‘green’ energy, and fake climate change.”
Nonetheless, Mr. Bessent said specifically that Mr. Trump “is not calling for the Fed to lower rates.” Instead, the Treasury secretary said, “If we deregulate the economy, if we get this tax bill done, if we get energy down, then rates will take care of themselves and the dollar will take care of itself.” The president has not contradicted him. So far, trying to control the Fed is a line that Mr. Trump hasn’t yet crossed. The bond market is another matter.
Longer-Term Rates
Treasury rates haven’t usually garnered the big headlines frequently devoted to the Federal Reserve.
The Fed is easier to explain. When it raises or lowers short-term rates, it’s clear that somebody took action and caused a measurable change.
In reality, when we report that the Fed is cutting or increasing rates, we mean that it is shifting its key policy rate, the federal funds rate. That’s what banks charge one another for borrowing and lending money overnight. It’s important as a signal — a red or green light for stock traders — and “it influences other interest rates such as the prime rate, which is the rate banks charge their customers with higher credit ratings,” according to the Federal Reserve Bank of St. Louis. “Additionally, the federal funds rate indirectly influences longer- term interest rates.”
What causes shifts in longer-term rates is much harder to pinpoint because they are set by an amorphous force: the market, with Treasuries at the core. Day to day, you won’t hear much about it unless you’re already a bond maven.
How does any market set prices? Supply and demand, the preferences of buyers and sellers, trading rules — the textbooks say these and other factors determine market prices. That’s true for tangible things like milk, eggs, gasoline, a house or a car. Treasury prices — and those of other bonds, which use Treasuries as a reference — are more complicated. They include estimates of the future of interest rates, of inflation and of the Fed’s intentions.
The Fed sets overnight rates, which are involved indirectly in bond rates for a simple reason. The interest rate for a 10-year Treasury reflects assumptions about many, many days of overnight rates, chained together until they span the life of whatever bond you buy. Inflation matters because when it rises more quickly than anticipated, it will reduce the real value of the stream of income you receive from standard bonds.
That happened in 2022. Inflation soared and so did yields, while bond prices, which move in the opposite direction, fell — creating losses for bond funds and for individual bonds sold under those conditions.
That’s why the increase in inflation in January, to an annual rate of 3 percent for the Consumer Price Index from 2.9 percent the previous month, immediately pushed up the 10-year Treasury yield, which stands above 4.5 percent. Trump administration policies are weighing on bond prices and yields, too.
Mr. Bessent has pointed out that oil prices are a major ingredient in inflation and, therefore, bond yields. But whether Mr. Trump will be able to bring down oil prices by encouraging drilling — while eliminating subsidies and regulations that encourage the development of energy alternatives — is open to question.
Some Trump policies being sold as promoters of economic growth — like cutting regulations and tax rates — could have that effect. But others, like reducing the size of the labor force — which his deportations of undocumented immigrants and restrictions on the arrival of new immigrants will do — could slow growth and increase inflation.
So could the tariffs that he has been threatening, delaying and, in some cases, already imposing. Expectations for future inflation jumped in the University of Michigan’s monthly survey in January. Joanne Hsu, the survey’s director, said that reflects growing concerns about the Trump tariffs among consumers.
“These consumers generally report that tariff hikes will pass through to consumers in the form of higher prices,” she wrote. She added that “recent data show an emergence of inflationary psychology — motives for buying-in-advance to avoid future price increases, the proliferation of which would generate further momentum for inflation.”
None of that augurs well for the 10-year Treasury yield. Nor does a warning issued by five former Treasury secretaries — Robert E. Rubin, Lawrence H. Summers, Timothy F. Geithner, Jacob J. Lew and Janet L. Yellen — who served in Democratic administrations.
They wrote in The New York Times that incursions of Mr. Musk’s cost-cutting team into the Treasury’s payment system threaten the country’s “commitment to make good on our financial obligations.” They applauded Mr. Bessent for assuring Congress in writing that the Treasury will safeguard the “integrity and security of the system, given the implications of any compromise or disruption to the U.S. economy.”
But they decried the need for any Treasury secretary to have to make such promises in his first weeks in office.
Other potential flash points for Treasury yields loom. The Fed has in the past manipulated the market bond supply by buying and selling securities. It’s reducing its holding now, which could put upward pressure on interest rates — and make the Fed an irresistible Trump target. At the same time, Secretary Bessent is financing the government debt mainly with shorter-term bills but may not be able to avoid increasing the supply of longer-term Treasuries indefinitely, as the federal deficit swells. Yet Congress is reluctant to raise the debt ceiling, which will bite later this year.
These are difficult times. So far, the 10-year yield hasn’t shifted all that much. The markets, at least, have been holding steady.
A Los Angeles County Superior Court judge threatened to throw grieving mothers out of court Wednesday if they couldn’t stop crying during testimony from Instagram boss Adam Mosseri, who took the stand to defend his company’s app against allegations the product is harmful to children.
The social media addiction case is considered a bellwether that could shape the fate of thousands of other pending lawsuits, transforming the legal landscape for some of the world’s most powerful companies.
For many in the gallery, it was a chance to sit face to face with a man they hold responsible for their children’s deaths. Bereaved parents waited outside the Spring Street courthouse overnight in the rain for a place in the gallery, some breaking into sobs as he spoke.
“I can’t do this,” wept mom Lori Schott, whose daughter Annalee died by suicide after a years-long struggle with what she described as social media addiction. “I’m shaking, I couldn’t stop. It just destroyed her.”
Judge Carolyn B. Kuhl warned she would boot the moms if they could not contain their weeping.
“If there’s a violation of that order from me, I will remove you from the court,” the judge said.
Mosseri, by contrast, appeared cool and collected on the stand, wearing thick wire-framed glasses and a navy suit.
“It’s not good for the company over the long run to make decisions that profit us but are poor for people’s well-being,” he said during a combative exchange with attorney Mark Lanier, who represents the young woman at the center of the closely watched trial. “That’s eventually going to be very problematic for the company.”
Lanier’s client, a Chico, Calif., woman referred to as Kaley G.M., said she became addicted to social media as a grade-schooler, and charges that YouTube and Instagram were designed to hook young users and keep them trapped on the platforms. Two other defendants, TikTok and Snap, settled out of court.
Attorneys for the tech titans hit back, saying in opening statements Monday and Tuesday that Kaley’s troubled home life and her fractious relationship with her family were to blame for her suffering, not the platforms.
They also sought to discredit social media addiction as a concept, while trying to cast doubt on Kaley’s claim to the diagnosis.
“I think it’s important to differentiate between clinical addiction and problematic use,” Mosseri said Wednesday. “Sometimes we use addiction to refer to things more casually.”
On Wednesday, Meta attorney Phyllis Jones asked Mosseri directly whether Instagram targeted teenagers for profit.
“We make less money from teens than from any other demographic on the app,” Mosseri said. “We make much more the older you get.”
Meta Chief Executive Mark Zuckerberg is expected to take the witness stand next week.
Kaley’s suit is being tried as a test case for a much larger group of actions in California state court. A similar — and similarly massive — set of federal suits are proceeding in parallel through California’s Northern District.
Mosseri’s appearance in Los Angeles on Wednesday follows a stinging legal blow in San Francisco earlier this week, where U.S. District Judge Yvonne Gonzalez Rogers blocked a plea by the tech giants to avoid their first trial there.
That trial — another bellwether involving a suit by Breathitt County School District in Kentucky — is now set to begin in San Francisco in June, after the judge denied companies’ motion for summary judgment. Defendants in both sets of suits have said the actions should be thrown out under a powerful 1996 law called Section 230 that shields internet publishers from liability for user content.
On Wednesday morning, Lanier hammered Mosseri over the controversial beauty filters that debuted on Instagram’s Stories function in 2019, showing an email chain in which Mosseri appeared to resist a ban on filters that mimicked plastic surgery.
Such filters have been linked by some research to the deepening mental health crisis in girls and young women, whose suicide rates have surged in recent years.
They have also been shown to drive eating disorders — by far the deadliest psychiatric illnesses — in teens. Those disorders continue to overwhelm providers years after other pandemic-era mental health crises have ebbed.
Earlier research linking social media and harms to young women was referenced in the November 2019 email chain reviewed in court Wednesday, in which one Instagram executive noted the filters “live on Instagram” and were “primarily used by teen girls.”
“There’s always a trade-off between safety and speech,” Mosseri said of the filters. “We’re trying to be as safe as possible but also censor as little as possible.”
The company briefly banned effects that “cannot be mimicked by makeup” and then walked the decision back amid fears Instagram would lose market share to less scrupulous actors.
“Mark [Zuckerberg] decided that the right balance was to focus on not allowing filters that promoted plastic surgery, but not those that did not,” Mosseri said. “I was never worried about this affecting our stock price.”
For Schott, seeing those decisions unfold almost a year to the day before her daughter’s death was too much to bear.
“They made that decision and they made that decision and they made that decision again — and my daughter’s dead in 2020,” she said. “How much more could that match? Timeline, days, decisions? Bam, she was dead.”
Meta, TikTok and Snap will be rated on their teen safety efforts amid rising concern about whether the world’s largest social media platforms are doing enough to protect the mental health of young people.
The Mental Health Coalition, a collective of organizations focused on destigmatizing mental health issues, said Tuesday that it is launching standards and a new rating system for online platforms. For the Safe Online Standards (S.O.S.) program, an independent panel of global experts will evaluate companies on parameters including safety rules, design, moderation and mental health resources.
TikTok, Snap and Meta — the parent company of Facebook and Instagram — will be the first companies to be graded. Discord, YouTube, Pinterest, Roblox and Twitch have also agreed to participate, the coalition said in a news release.
“These standards provide the public with a meaningful way to evaluate platform protections and hold companies accountable — and we look forward to more tech companies signing up for the assessments,” Antigone Davis, vice president and global head of safety at Meta, said in a statement.
TikTok and Snap executives also expressed their commitment to online safety.
Parents, lawmakers and advocacy groups have criticized online platforms for years over whether they’re protecting the safety of billions of users. Despite having rules around what content users aren’t allowed to post, they’ve grappled with moderating harmful content about self-harm, eating disorders, drugs and more.
Meanwhile, technology continues to play a bigger role in people’s lives.
The rise of artificial intelligence-powered chatbots has heightened mental health concerns as some teens are turning to technology for companionship. Companies have also faced a flurry of lawsuits over online safety.
This week, a highly watched trial over whether tech companies such as Instagram and YouTube can be held liable for allegedly promoting a harmful product and addicting users to their platforms kicked off in Los Angeles.
TikTok and Snap, the parent company of disappearing-messages app Snapchat, settled for undisclosed sums to avoid the trial.
In opening statements, one of the lawyers representing the California woman who alleges she became addicted to YouTube and Instagram as a child said the products were designed to be addictive.
Tech companies have denied the allegations made in the lawsuit and say internal documents are being twisted to portray them as villainous when there are other factors, such as childhood trauma, leading to the mental health issues of some of their users.
Meta Chief Executive Mark Zuckerberg is expected to testify at the Los Angeles trial. Another trial over a lawsuit that alleges Meta failed to protect children from sexual exploitation and violated New Mexico’s consumer protection laws also kicked off this week.
The new ratings were also announced on Tuesday on Safer Internet Day, a global campaign that promotes using technology responsibly, especially among young people. Companies on Tuesday, such as Google, outlined some of the work they’ve done around safety, including parental controls to set time limits for scrolling through short videos.
The ratings will be color-coded, and companies that perform well on the tests will get a blue shield badge that signals they help reduce harmful content on the platform and their rules are clear. Those that fall short will receive a red rating, indicating they’re not reliably blocking harmful content or lack proper rules. Ratings in other colors indicate whether the platforms have partial protection or whether their evaluations haven’t been completed yet.
“By creating a shared framework for accountability, S.O.S. helps move us toward online spaces that better support mental health and well-being,” Kenneth Cole, the fashion designer who founded the Mental Health Coalition, said in a statement.
A website for S.O.S. states that technology companies didn’t influence the development of the new standards and they aren’t funding the project. The Mental Health Coalition, though, has teamed up with Meta in the past on other initiatives. Meta and Google are also listed as “creative partners” on the coalition’s website.
The coalition, which is based in New York, didn’t immediately respond to an email asking about its funding.
Companies have published their online rules and data on content moderation. Those that are interested in participating in the project voluntarily hand over documents on policies, tools and product features.
Major League Baseball is making streaming options available for fans to watch in-market games of 20 teams, including the Dodgers, Los Angeles Angels, San Francisco Giants and San Diego Padres — a significant shift to respond to the fast-changing TV landscape.
The Angels on Tuesday announced its arrangement with the league to make its games more widely available. The club said the option — Angels.TV — would be available for purchase for $99.99 for the full season or $19.99 per month through the MLB app.
“We are excited to partner with Major League Baseball to bring Angels games to their streaming platform,” Angels President John Carpino said in a statement. “Our priority is making it as easy as possible for fans to watch Angels Baseball and MLB’s industry-leading app provides another great option to stay connected to the team.”
The league separately announced the move, which provides options for fans of other teams, through its MLB app. In-market games for the Arizona Diamondbacks, Baltimore Orioles, Cincinnati Reds, Cleveland Guardians, Colorado Rockies, Kansas City Royals, Miami Marlins, Milwaukee Brewers, Minnesota Twins, New York Mets, Philadelphia Phillies, St. Louis Cardinals, Seattle Mariners, Tampa Bay Rays and Washington Nationals will be provided through the app.
Games will still be available to traditional pay-TV subscribers.
Spectrum, owned by cable giant Charter Communications, which distributes the Dodgers’ SportsNet LA, had previously made available Dodger games as a streaming option through a separate app.
On Tuesday, ESPN announced that it would become the new streaming home of MLB.TV, bringing out-of-market live games to the ESPN App and ESPN.com.
“With MLB.TV now available through ESPN, we’re taking a significant step forward in reinforcing ESPN as the home of the MLB regular season while deepening the value proposition of the ESPN Unlimited plan — giving fans even more flexibility in how and where they watch all season long,” Rosalyn Durant, executive vice president, ESPN Programming & Acquisitions, said in a statement.
The move comes as traditional regional sports networks struggle amid the exodus of pay-TV customers. Regional sports networks once were viewed as cash cows for teams and TV programming companies that owned them, but, in recent years, at least one regional sports network owner has filed for bankruptcy. That prompted the MLB to step in to fill the gap.
The league said it also was taking over the television production of games for 14 teams, including the Padres and Arizona Diamondbacks.
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