In times of uncertainty and/or high unemployment, the fed will reduce interest rates to incentivize private investment to keep people employed. Companies will take loans out from banks at relatively low rates with the expectation that they will be relatively easy to pay off with the increased efficiency or growth afforded by the investment.

In this scenario, the risk free rate (US treasury bond ) is very low and not worth it, so investors will look for higher returns elsewhere, i.e. in public or private companies or other bonds. As interest rates are reduced, bond yields go up. This is due to reduced demand for the treasury bills which have a fixed coupon rate (read: interest rate), but the prices are allowed to float. As interest rates are lowered, demand is reduced, so prices go down. As prices go down, the coupon rate is larger relative to the purchase price, which is why yield increases as bond price and interest rates decrease.

https://www.schwab.com/learn/story/why-go-long-when-short-term-bonds-yield-more

Reduced interest rates will

When this isn’t enough, the fed can also perform quantitative easing, which is the purchasing of government treasuries with printed money. This produces artificial demand for