Business

Which Interest Rate Should You Care About?

Published

1 year ago

February 14, 2025

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.

Click to comment

Business

Living comfortably costs the most in these Californian cities

Published

12 hours ago

March 29, 2026

Press Room

Living comfortably costs the most in these Californian cities

In California’s spendy cities, living comfortably costs more than almost anywhere else.

From the Bay Area to Orange County, living well requires incomes north of $150,000 in the pricier places, according to a recent study. A family with two kids needs more than $400,000 per year in some spots.

The study, conducted by financial technology company SmartAsset, analyzed 100 of the largest cities in the country.

San José ranked as the second-most expensive city, where a single adult must make nearly $160,000 and a family of four needs over $400,000 to live comfortably, the study found. Orange County cities — Irvine, Anaheim and Santa Ana — followed closely behind.

New York City topped the list, with a salary for comfortable living at about $900 higher than in San José.

Los Angeles ranked 16th on the list, where a single adult must make $120,307 to live comfortably. A family of four should bring in just over $280,000 annually.

San Diego and Chula Vista tied for seventh place, with a $136,781 salary for a single adult. San Francisco came in ninth, followed by Fremont and Oakland, which tied for 10th.

Santa Clarita, Long Beach, Riverside and Sacramento also made the top 20 list.

The study measured comfortable living using the 50/30/20 rule, in which half of a household’s post-tax income should go to needs, 30% to wants and 20% to savings.

The company used the MIT living wage calculator to determine cost of living by region for single adults and families of four.

A family of four faces the toughest living costs in the Bay Area, taking up four of the top five cities with the highest salaries needed to live comfortably.

San Francisco topped that list, with income for two parents projected at $407,597. Projected income in San José was slightly lower at $402,771, followed by Fremont and Oakland.

The study’s findings are in line with existing research that paints a grim picture of the statewide housing crisis, said Carolina Reid, an associate professor of city and regional planning at UC Berkeley.

“California is one of the more expensive places to live, and that definitely is true when we’re talking about families who are juggling multiple competing demands on their incomes,” Reid said.

Housing costs, groceries and gas prices — all considered necessities in the study — have skyrocketed nationwide, while wages have largely remained stagnant.

California housing costs are about double the national average. The state has struggled to keep up with demand, largely due to the lingering impacts of decades-long missteps in housing policies, said Paavo Monkkonen, a professor in urban planning at UCLA.

“It’s a problem that we created very slowly over a long period of time,” Monkkonen said.

The expected salary needed to live comfortably was significantly higher than the median household income for some California cities.

The difference is especially stark in Santa Ana, where the median salary is $95,118 — over $56,000 less than the projected salary needed to live comfortably in the city for a single adult.

Los Angeles had a $38,000 gap between the city’s median household income of $82,263 and the projected salary.

Cost of living is often hard to measure given the variability in how households choose to spend their money, Reid said. Housing is also the primary driver for living costs, which Monkkonen said is difficult to measure given the market’s unpredictability.

“People are living here somehow, right?” he said. “If you just look at the incomes and rents separately, you don’t really get a picture of how people are doing it…they’re spending a lot of their incomes on rents, but they’re also doubling up.”

Business

How the landmark verdict against Meta and YouTube could hit their businesses

Published

24 hours ago

March 28, 2026

Press Room

How the landmark verdict against Meta and YouTube could hit their businesses

A Los Angeles jury dealt a blow to social media giants Meta and YouTube this week when it found that the platforms were negligent for designing addictive features that harmed the mental health of a California woman.

Both companies plan to appeal, but the ruling has ignited uncertainty around the tech companies’ future and sparked questions about the potential fallout.

The seven-week trial kicked off in February, featuring testimony from Meta and YouTube executives.

Kaley G.M., a 20-year-old Chico, Calif., woman, sued the platforms in 2023, alleging that using social media at a young age led to her mental health problems such as body dysmorphia and depression. She also sued TikTok and Santa Monica-based Snap and those companies settled ahead of the trial.

Lawyers representing the woman argued that the platforms hook in young users with features such as infinite scrolling, autoplaying videos and beauty filters.

People use social media to keep up with their friends and family, but teens can also feel inadequate, sad or anxious when they compare themselves to a curated version of other people’s lives online. They’re also spending a lot of time watching a seemingly endless amount of short videos.

A jury determined that Meta was 70% responsible for Kaley’s harms and YouTube was 30% responsible. They awarded her a total of $6 million. The ruling came shortly after a New Mexico jury found Meta liable for $375 million in damages after the state Atty. Gen. Raúl Torrez alleged the platform’s features enabled predators and pedophiles to exploit children.

“These verdicts mark an unsurprising breaking point. Negative sentiment toward social media has been building for years, and now it’s finally boiled over,” said Mike Proulx, a director at Forrester, a market research company.

How have the companies reacted to the verdict?

Meta and Google, which owns YouTube, said they disagreed with the ruling and plan to appeal.

“This case misunderstands YouTube, which is a responsibly built streaming platform, not a social media site,” said Jose Castañeda, a Google spokesman, in a statement.

Meta spokesman Andy Stone posted the company’s statement on social media site X.

“Teen mental health is profoundly complex and cannot be linked to a single app. We will continue to defend ourselves vigorously as every case is different, and we remain confident in our record of protecting teens online,” the statement said.

Tech companies have been responding to mental health concerns, rolling out new parental controls so parents can keep track of their children’s screen time and moderating harmful content. Instagram and YouTube have versions of their apps meant for young people.

Some child advocacy groups and lawmakers, though, say these changes aren’t enough.

The ruling could affect how much money YouTube’s parent company, Alphabet, and Meta earn as they spend more on legal battles. While they make billions of dollars from advertising, investors are wary about higher expenses. The companies are already spending billions of dollars on artificial intelligence and developing new hardware such as smartglasses.

On Thursday, Meta’s stock fell more than 7% to $549 per share. Alphabet saw its share price drop more than 2% to roughly $280.

In 2025, Meta’s annual revenue grew 22% from the previous year to $200.97 billion.

Last year, YouTube’s annual revenue surpassed more than $60 billion. Both Google and Meta have been laying off workers as they spend more on AI.

The ongoing backlash hasn’t stopped tech companies from growing their users.

A majority of U.S. teens use YouTube, TikTok, Instagram and Snapchat, according to a 2025 Pew Research Center survey. More than 3.5 billion people use one of Meta’s products, which include Instagram and Facebook.

Social media has continued to change over the years as companies double down on short videos and AI chatbots.

Mental health concerns have only heightened as AI chatbots that respond to questions and generate content become more popular. Families have sued OpenAI, Character.AI and Google after their loved ones who used chatbots killed themselves.

Some analysts remain skeptical that Meta and YouTube would make drastic changes to their products because they’ve weathered crises before.

“Neither Meta nor YouTube is going to do anything different until a court orders them to, or there’s a significant drop in user or advertiser use,” said Max Willens, Principal Analyst at eMarketer.

Other analysts said legal risks could also affect how tech companies develop new AI-powered products and features.

“It’s likely that tech firms will now face increased scrutiny over the design of their platforms, which should drive more thoughtful inclusion of features that foster healthier interactions and safeguard mental health,” said Andrew Frank, an analyst with Gartner for Marketing Leaders.

At the very least, the verdicts serve as a “dire warning about how we handle the next wave of technology,” Proulx said.

“If we’re still struggling to put effective guardrails around social media after nearly two decades, we’re far from prepared for the growing harms of AI, which is moving faster, scaling wider, and embedding itself far deeper into people’s lives,” he said.

Times staff writer Sonja Sharp contributed to this report.

Business

Justin Vineyards pays $1.49 million to settle sex harassment case

Published

1 day ago

March 28, 2026

Press Room

Justin Vineyards pays .49 million to settle sex harassment case

Justin Vineyards & Winery has agreed to workplace reforms and to pay $1.49 million to settle a federal lawsuit accusing it of allowing female employees to be sexually harassed and then retaliating against them for reporting it.

The Paso Robles business reached the settlement with the federal Equal Employment Opportunity Commission. It was was approved Thursday by a federal judge.

Also named in the lawsuit and settlement is the Wonderful Co., the Los Angeles agribusiness owned by Beverly Hills billionaires Lynda and Stewart Resnick.

In 2010, Wonderful acquired Justin, which includes production facilities, a tasting room, inn and Michelin-starred restaurant.

The lawsuit, filed in 2022, alleged that female employees were subject since August 2017 to comments about their appearance; texts containing inappropriate photos; touching of their breasts, buttocks and genitals; forced kissing and other harassment by their male supervisors.

It further alleged that the companies “knew or should have known” about the hostile work environment.

The lawsuit also said that when complaints were made about the harassment, they were not properly investigated and the employees were subject to retaliation, including being given double shifts, being accused of wrongdoing and being berated and yelled at by supervisors.

Aside from the monetary penalty, the settlement requires Justin and Wonderful to halt any harassment or retaliation, undergo compliance audits and take other measures at the vineyard operations.

The companies denied all the allegations and agreed to the settlement to resolve the litigation, according to the consent decree.

In a statement, Justin said that the matter “dates back many years and was dealt with immediately and decisively the moment we became aware of any allegations of conduct that did not align with what is appropriate in the workplace.

“With this agreement reached, we look forward to putting this chapter fully behind us and continuing to focus on the incredibly talented team we have in place today,” the statement said.

Beatriz Andre, acting regional attorney for the EEOC’s Los Angeles District Office, commended Justin and Wonderful for reaching the settlement.

“The policy changes and reporting to which the companies agreed are important steps in ensuring a workplace free of discrimination,” she said in a statement.

In 2016, workers cut down dozens of oaks trees on land managed by Justin to make room for new grape plantings, stirring up controversy.

The Resnicks said they were unaware of the cutting, apologized, donated the land to a nature conservancy and agreed to plant thousands of trees on vineyard property.

After buying Justin, Wonderful acquired Landmark Vineyards in Sonoma County and Lewis Cellars in Napa Valley.