Why the interest-rate cut isn't delivering the relief consumers were hoping for

• This post originally appeared in the Insider Today newsletter.

Good morning. Milton has strengthened once again into a Category 5 hurricane. Gas stations across Florida are already running out of fuel as millions of people try to flee.

In today's big story, we got our first interest-rate cut, but it doesn't feel like it for many consumers.

What's on deck:

• Markets: Roblox is the latest target of short-seller Hindenburg Research.
• Tech: The DOJ is considering asking a judge to break up Google.
• Business: Walt Disney World will temporarily close its doors for Hurricane Milton.

But first, we're canceling the landing.

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The big story

So much for the help

The US economy is having an Instagram vs. reality moment.

Last month's interest-rate cuts were supposed to kick off a new era. After two years of battling inflation, the Federal Reserve finally claimed victory. More rate cuts were coming, which meant lower borrowing costs for everyone.

But the relief many were hoping for isn't materializing, writes Business Insider's Jennifer Sor. Let's break down why.

We finally got an interest-rate cut, but borrowing costs are still high. What gives? First off, last month's interest-rate cut wasn't going to provide immediate relief. It takes time for cuts to trickle down to consumers. The Fed also telegraphed the cut, so the market started pricing it in.

That seems fair, but borrowing rates are still rising in some cases. Yes, the average 30-year fixed mortgage rate has gone up 47 basis points since the Fed cut rates, writes BI's Matthew Fox.

So the Fed cut rates but borrowing costs went up? How is that possible? You can thank the 10-year Treasury yield, which is a key benchmark used by lenders. It went above 4% this week for the first time since August.

I'm confused. Why is there such a discrepancy between the two? The Fed's rate is focused on the short-term while the 10-year Treasury reflects a longer-term view (hence the name). As a result, the 10-year bond yield can diverge from the Fed's benchmark rate.

Gulp So what does the 10-year Treasury rising mean for the economy? Big picture, it's a good thing. Thanks to a stellar jobs report, investors have a positive view of the economy's future. But the downside is we shouldn't expect the slew of rate cuts investors were banking on. The economy will likely avoid a recession and not need the help.

Is this a soft landing or a hard landing? Neither. It's considered a "no landing" because the economy remains strong, but in a way that risks reigniting inflation, which would hamstring the prospect of future stimulative rate cuts.

What's with all the aviation metaphors? I don't know.

OK, so at this rate, will I ever be able to buy a house? It's honestly not as bad as it seems. BI's James Rodriguez, who's covered the housing market for a while, has a piece on why the industry's ice age is starting to thaw. There was a 34% year-over-year increase in active listings in September. More inventory will help unstick the economy.

News brief

Top headlines

• The Kremlin says Trump sent Putin COVID tests during the pandemic, but denies subsequent calls.
• Boeing's negotiations with union leaders break down 2 days after restarting.
• Exclusive: AI cloud startup Ori is in talks to raise up to $80 million in funding, sources say.
• A surprising company might beat Elon Musk in the robotaxi race.
• Influencers are swiping a new black card at restaurants, spas, and fitness studios.
• I don't allow Roblox in my house. Here's why.

3 things in markets

1. The Hurricane Milton trade is in full effect, according to US natural gas futures. Energy traders are betting the storm barreling toward Tampa will cause power outages in multiple states. Futures on US natural gas have dropped 8% over the past few days as power plants are expected to be left idling as demand evaporates.
2. A short-seller takes aim at Roblox for "lying to investors." Hindenburg Research accused the online gaming platform of inflating its user numbers by including bots and players with multiple accounts. It also called Roblox a "pedophile hellscape," claiming child users are exposed to grooming and pornography. A Roblox spokesperson said in a statement it "totally" rejected the claims made in the report.
3. Bank of America is bullish on stock gains ahead of this earnings season. "The bar isn't high," BofA analysts said in a Tuesday note. Stocks should rise as long as companies report they're feeling good about lower rates.

3 things in tech

1. OpenAI's exec exodus might actually be a good thing, Vinod Khosla says. The legendary investor backing OpenAI has plenty of confidence in the startup, even after multiple high-profile exits. He also thinks the AI industry is catching strays from "Luddites" — those who think the tech is a slippery slope into a Westworld-ian apocalypse.
2. The DOJ may seek to break up Google. After a major antitrust lawsuit against Google, a federal judge ruled that it illegally monopolized online search. Now, prosecutors are proposing "behavioral and structural remedies." If enacted by a judge, the changes could force a major reorganization or even a breakup of some of Google's basic businesses, including its search engine.
3. Where are the Gen Z Mark Zuckerbergs? Gen Zers, aged 13 to 27, haven't produced any big-name tech founders like previous generations. But don't just blame it on Zoomers' blasé attitudes toward work — there's a bigger reason.

3 things in business

1. Zara's bizarre website is the secret to its success. The site, which feels more like a magazine spread than an online retailer, is routinely roasted for being "virtually unusable." But experts say there's a method to Zara's madness: It's meant to project an upscale image, distancing itself from other fast-fashion brands.
2. The "happiest place on earth" takes a rain check. There are literally storm clouds forming over Florida's family-friendly amusement parks, as the state braces for Hurricane Milton. It's a rare occasion for Disney World, which has only closed its gates nine times in more than 50 years.
3. Tesla executives are hitting the exits. In the past week, four of Elon Musk's direct reports have announced they're leaving, or have already left, the company. Their departures come ahead of Robotaxi Day tomorrow, where Musk is tasked with convincing investors that Tesla is more than just a car company.

What's happening today

• Hurricane Milton is projected to hit the west coast of Florida, including the Tampa Bay area.
• Federal Open Market Committee's September meeting minutes and forecast published.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Milan Sehmbi, fellow, in London. Amanda Yen, fellow, in New York.