10 year Yield hits 5%

2,437 Views | 24 Replies | Last: 16 min ago by BlueHeeler
Dan Scott
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
4:36p, 9/14/26
AG
5% last touched briefly in 2023. Prior to that was 2007. 2006 last time is was above 5% for extended period of time about 3 months. In the 20 years rates this high is not normal. 30 year mortgage in 5 years has gone from 3% to 7%

The 10 year is following oil pretty closely. Investors think inflation is here to stay so they are selling bonds pushing rates up. Lots of US debt coming due that will be refinanced much higher.

You can argue the economy is strong right now because if recession was around the corner, they'd be piling in. Market is focused on the inflation effect of higher oil prices rather than the recession effect. There's stagflation but calls for that never pan out in recent times.

How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.
Reply Quote
15
BlueHeeler
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
4:52p, 9/14/26
AG
Nobody seems to really be paying attention to this. I think alot of folks will be soon.

Per the Buffett quote:

"interest rates are to asset prices what gravity is to the apple."
Reply Quote
3
nortex97
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Dan Scott • 4:56p, 9/14/26
AG
This is fine, everything is fine.

Said nobody.

And not a single candidate in a 'battleground' seat (or any other?) is campaigning on cutting entitlements/non-discretionary spending.
Reply Quote
22
Dobro Turtlebane
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Dan Scott • 5:00p, 9/14/26
Dan Scott said:
5% last touched briefly in 2023. Prior to that was 2007. 2006 last time is was above 5% for extended period of time about 3 months. In the 20 years rates this high is not normal. 30 year mortgage in 5 years has gone from 3% to 7%

The 10 year is following oil pretty closely. Investors think inflation is here to stay so they are selling bonds pushing rates up. Lots of US debt coming due that will be refinanced much higher.

You can argue the economy is strong right now because if recession was around the corner, they'd be piling in. Market is focused on the inflation effect of higher oil prices rather than the recession effect. There's stagflation but calls for that never pan out in recent times.

How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.


The underlying story is harder than just 3.5% inflation is here to stay. The 10-year breakeven and the 5yr5yr are still hovering around 2.35%, which means a 5% 10 year is demanding a 2.65% real premium. That is suffocating for small businesses, homebuyers, and corporations. On some level it reads "inflation is here, the fed can't do anything about it, and the treasury has a bunch of paper it has to sell." People are going to have to pay for duration

Mortgages are touching 7%. If the bond market fully decides that 3.5% inflation is the new normal, 10 year rates are going to 6.5% for investment grades. 30 year mortgages and 20 year corporates will rise or asset prices will fall to a new valuation
Reply Quote
2
1 edit
MemphisAg1
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Dobro Turtlebane • 5:08p, 9/14/26
AG
Dobro Turtlebane said:
Dan Scott said:
5% last touched briefly in 2023. Prior to that was 2007. 2006 last time is was above 5% for extended period of time about 3 months. In the 20 years rates this high is not normal. 30 year mortgage in 5 years has gone from 3% to 7%

The 10 year is following oil pretty closely. Investors think inflation is here to stay so they are selling bonds pushing rates up. Lots of US debt coming due that will be refinanced much higher.

You can argue the economy is strong right now because if recession was around the corner, they'd be piling in. Market is focused on the inflation effect of higher oil prices rather than the recession effect. There's stagflation but calls for that never pan out in recent times.

How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.


The underlying story is harder than just 3.5% inflation is here to stay. The 10-year breakeven and the 5yr5yr are still hovering around 2.35%, which means a 5% 10 year is demanding a 2.65% real premium. That is suffocating for small businesses, homebuyers, and corporations. On some level it reads "inflation is here, the fed can't do anything about it, and the treasury has a bunch of paper it has to sell." People are going to have to pay for duration

Mortgages are touching 7%. If the bond market fully decides that 3.5% inflation is the new normal, 10 year rates are going to 6.5% for investment grades. 30 year mortgages and 20 year corporates will rise or asset prices will fall to a new valuation

Part of that 2.65% real premium is a risk premium that is bigger now than it was just a few years ago because US debt lending isn't exactly risk-free anymore with budget deficits of 6%/yr during decent economic times. Most if not all of the credit rating agencies have downgraded US government debt a notch from its previous lofty perch of a perfect rating. The US defaulting on its debt remains extremely unlikely, but trying to inflate our way out of it with continued money-printing-out-of-thin-air is not, thus the increased risk premium we're seeing from bond buyers.
Reply Quote
1
1 edit
Dobro Turtlebane
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to MemphisAg1 • 5:10p, 9/14/26
Yes good point

I think Bessent's bond buyback flop sent the exact opposite signal to the market that he had hoped. Somewhere in the back of the bond market's mind they thought "there is some uncertainty here, maybe the Treasury has a plan and some tools to use to enact that plan." Then Treasury comes out wanting to finance the recapture of 0.02% of outstanding bonds, effectively removing all uncertainty. The Treasury has no real plan and no arrows in their quiver of they did have a plan. The credit risk is slightly elevated, and the economic risk is too
Reply Quote
1 edit
BlueHeeler
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to MemphisAg1 • 5:16p, 9/14/26
AG
I think you hit on it. Before, we just printed money to buy treasuries to control the yield and it worked out OK because of that "premium credit rating feel".

Now, it feels like they have lost control of the situation. The world is taking note that this is unsustainable. Bessent's recent little buyback charade went down in flames. The old money printing gig they have been using since 2008 is no longer working.
Reply Quote
5
1 edit
Gap
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
5:28p, 9/14/26
AG
A significant factor not mentioned:

Many of the world's richest and cash laden companies are now seeking gigantic long-term financing as part of their AI buildouts. These companies borrowing like that is something new and it is a good thing.

There is now much more competition with governments in these markets for long-term debt. The government could get its financial house in order and under control as part of a solution too so the private sector can grow, create value, wealth, and jobs.
Reply Quote
5
1 edit
Dan Scott
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
12:13a, 9/15/26
AG
Just broke the 2023 high. Currently at 5.028%
Reply Quote
1
bmks270
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
2:42a, 9/15/26
AG
"""
How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.
"""

Kind of sweet, but that 20 million may not be 20 million for long if you wanted to sell the bond. The 5% might be worse than inflation after the first 2 years of holding the bond.
Reply Quote
1
1 edit
91AggieLawyer
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Dan Scott • 3:41a, 9/15/26
AG
Dan Scott said:
How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.

If you had 20 mil in cash, its likely 1 mil a year to you would be pocket change. You'd need 10 mil a year just to "survive."
Reply Quote
1
lb3
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Dan Scott • 3:51a, 9/15/26
AG
Dan Scott said:
How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.
My grandmother put her life savings into T-bills in the early 80s when yields were between 10% and 14%. Paul Volcker made her rich.
Reply Quote
3
ts5641
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Dobro Turtlebane • 5:52a
Dobro Turtlebane said:
Dan Scott said:
5% last touched briefly in 2023. Prior to that was 2007. 2006 last time is was above 5% for extended period of time about 3 months. In the 20 years rates this high is not normal. 30 year mortgage in 5 years has gone from 3% to 7%

The 10 year is following oil pretty closely. Investors think inflation is here to stay so they are selling bonds pushing rates up. Lots of US debt coming due that will be refinanced much higher.

You can argue the economy is strong right now because if recession was around the corner, they'd be piling in. Market is focused on the inflation effect of higher oil prices rather than the recession effect. There's stagflation but calls for that never pan out in recent times.

How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.


The underlying story is harder than just 3.5% inflation is here to stay. The 10-year breakeven and the 5yr5yr are still hovering around 2.35%, which means a 5% 10 year is demanding a 2.65% real premium. That is suffocating for small businesses, homebuyers, and corporations. On some level it reads "inflation is here, the fed can't do anything about it, and the treasury has a bunch of paper it has to sell." People are going to have to pay for duration

Mortgages are touching 7%. If the bond market fully decides that 3.5% inflation is the new normal, 10 year rates are going to 6.5% for investment grades. 30 year mortgages and 20 year corporates will rise or asset prices will fall to a new valuation

Man, I hope my pension can keep up.
Reply Quote
redsquirrelAG
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
6:05a
AG
And that 1 million will buy a happy meal at that time.
Reply Quote
5
ETFan
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to nortex97 • 7:11a
nortex97 said:
This is fine, everything is fine.

Said nobody.

And not a single candidate in a 'battleground' seat (or any other?) is campaigning on cutting entitlements/non-discretionary spending.


Because those aren't the cause of this mess.
Reply Quote
3
BusterAg
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Dan Scott • 7:31a
AG
Dan Scott said:
5% last touched briefly in 2023. Prior to that was 2007. 2006 last time is was above 5% for extended period of time about 3 months. In the 20 years rates this high is not normal. 30 year mortgage in 5 years has gone from 3% to 7%

The 10 year is following oil pretty closely. Investors think inflation is here to stay so they are selling bonds pushing rates up. Lots of US debt coming due that will be refinanced much higher.

You can argue the economy is strong right now because if recession was around the corner, they'd be piling in. Market is focused on the inflation effect of higher oil prices rather than the recession effect. There's stagflation but calls for that never pan out in recent times.

How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.

The 10 year will not go down until the deficit and GDP come back into line.

The. End.

Stop. Spending. Our. Money.

The rest is just details.

The best place to start is entitlement fraud, which is something like 5% to 10% of the federal budget, and is 100% wasted.
Reply Quote
4
1 edit
BusterAg
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Dobro Turtlebane • 7:34a
AG
Dobro Turtlebane said:
Yes good point

I think Bessent's bond buyback flop sent the exact opposite signal to the market that he had hoped. Somewhere in the back of the bond market's mind they thought "there is some uncertainty here, maybe the Treasury has a plan and some tools to use to enact that plan." Then Treasury comes out wanting to finance the recapture of 0.02% of outstanding bonds, effectively removing all uncertainty. The Treasury has no real plan and no arrows in their quiver of they did have a plan. The credit risk is slightly elevated, and the economic risk is too

The only group of people with arrows left is congress, who continues to spend our money.
Reply Quote
2
Dobro Turtlebane
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to ETFan • 7:45a
ETFan said:
nortex97 said:
This is fine, everything is fine.

Said nobody.

And not a single candidate in a 'battleground' seat (or any other?) is campaigning on cutting entitlements/non-discretionary spending.


Because those aren't the cause of this mess.


?

The debt and unending deficit spending are absolutely the proximate cause of this. Sure, the markets are spooked by the inflationary vs recessionary fight of energy prices. Sure, Bessent tried to bluff the table with a 2-7 offsuit and proved that Treasury has no plan to fight it. But the underlying cause is the market has $32T options for bonds so those sellers are having to compete for buyers.

The most hardcore True Believers have adopted Keynesian fiscal and monetary policies recently, but even Keynes said that the debt should be repaid when stimulus wasn't needed.
Reply Quote
3
Towns03
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Dan Scott • 7:49a
AG
If I have 20MM in the bank, spinning off 1MM barely covers my turboprop expenses and boat in Costa Rica. Gotta find a better place for that money.
Reply Quote
1
Less Evil Hank Scorpio
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to BusterAg • 7:59a
AG
BusterAg said:
Dan Scott said:
5% last touched briefly in 2023. Prior to that was 2007. 2006 last time is was above 5% for extended period of time about 3 months. In the 20 years rates this high is not normal. 30 year mortgage in 5 years has gone from 3% to 7%

The 10 year is following oil pretty closely. Investors think inflation is here to stay so they are selling bonds pushing rates up. Lots of US debt coming due that will be refinanced much higher.

You can argue the economy is strong right now because if recession was around the corner, they'd be piling in. Market is focused on the inflation effect of higher oil prices rather than the recession effect. There's stagflation but calls for that never pan out in recent times.

How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.

The 10 year will not go down until the deficit and GDP come back into line.

The. End.

Stop. Spending. Our. Money.

The rest is just details.

The best place to start is entitlement fraud, which is something like 5% to 10% of the federal budget, and is 100% wasted.


Can you provide a source for $340-680 billion (5-10% of fed budget) in entitlement fraud? Thats...a lot.
Reply Quote
1
ETFan
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Towns03 • 8:27a
Towns03 said:
If I have 20MM in the bank, spinning off 1MM barely covers my turboprop expenses and boat in Costa Rica. Gotta find a better place for that money.


I don't think you'll be able to cover the hanger space/s and annual with a mil... Ok maybe, but the other expenses. And jet A isn't getting any cheaper...



To the topic, and person who responded to me. Yes, reduce spending sure, but I responded to someone who felt it needed to be labeled "entitlements", instead of ya know, programs that help Americans, lol. Surely we have wasteful spending that meaningfully adds up? "Entitlements" is a dog whistle.
Reply Quote
1
Dobro Turtlebane
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Gap • 8:59a
Gap said:
A significant factor not mentioned:

Many of the world's richest and cash laden companies are now seeking gigantic long-term financing as part of their AI buildouts. These companies borrowing like that is something new and it is a good thing.

There is now much more competition with governments in these markets for long-term debt. The government could get its financial house in order and under control as part of a solution too so the private sector can grow, create value, wealth, and jobs.


On some level yes, indeed. But the market has no idea how to price the Solow residual of these data centers. Is it truly transformative efficiency? In 2 years will it be just another hugely expensive capex with the real returns of a Windows upgrade? Or is it a bubble?

Y* = ?? is hard to price in the 20 year market
Reply Quote
BusterAg
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Less Evil Hank Scorpio • 9:06a
AG
Less Evil Hank Scorpio said:
BusterAg said:
Dan Scott said:
5% last touched briefly in 2023. Prior to that was 2007. 2006 last time is was above 5% for extended period of time about 3 months. In the 20 years rates this high is not normal. 30 year mortgage in 5 years has gone from 3% to 7%

The 10 year is following oil pretty closely. Investors think inflation is here to stay so they are selling bonds pushing rates up. Lots of US debt coming due that will be refinanced much higher.

You can argue the economy is strong right now because if recession was around the corner, they'd be piling in. Market is focused on the inflation effect of higher oil prices rather than the recession effect. There's stagflation but calls for that never pan out in recent times.

How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.

The 10 year will not go down until the deficit and GDP come back into line.

The. End.

Stop. Spending. Our. Money.

The rest is just details.

The best place to start is entitlement fraud, which is something like 5% to 10% of the federal budget, and is 100% wasted.


Can you provide a source for $340-680 billion (5-10% of fed budget) in entitlement fraud? Thats...a lot.

GAO says $233B to $521B in state administered programs annually. And they have an incentive to be conservative.

https://www.gao.gov/products/gao-26-109100
Reply Quote
2
Less Evil Hank Scorpio
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to BusterAg • 9:11a
AG
BusterAg said:
Less Evil Hank Scorpio said:
BusterAg said:
Dan Scott said:
5% last touched briefly in 2023. Prior to that was 2007. 2006 last time is was above 5% for extended period of time about 3 months. In the 20 years rates this high is not normal. 30 year mortgage in 5 years has gone from 3% to 7%

The 10 year is following oil pretty closely. Investors think inflation is here to stay so they are selling bonds pushing rates up. Lots of US debt coming due that will be refinanced much higher.

You can argue the economy is strong right now because if recession was around the corner, they'd be piling in. Market is focused on the inflation effect of higher oil prices rather than the recession effect. There's stagflation but calls for that never pan out in recent times.

How sweet would it be if you had $20M cash and collect $1M/year for next 10 years doing nothing.

The 10 year will not go down until the deficit and GDP come back into line.

The. End.

Stop. Spending. Our. Money.

The rest is just details.

The best place to start is entitlement fraud, which is something like 5% to 10% of the federal budget, and is 100% wasted.


Can you provide a source for $340-680 billion (5-10% of fed budget) in entitlement fraud? Thats...a lot.

GAO says $233B to $521B in state administered programs annually. And they have an incentive to be conservative.

https://www.gao.gov/products/gao-26-109100

Thank you. That's a lot of waste.
Reply Quote
BlueHeeler
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
4:59p
AG
Just curious - would a significant stock market crash (20% or worse) typically raise bond prices and lower yields as people flee/convert to safer assets? It seems that happened back in 2008 and seems to be what I have read.
Reply Quote
2 edits
Refresh
Page 1 of 1
 
×
subscribe Verify your student status
See Subscription Benefits
Trial only available to users who have never subscribed or participated in a previous trial.