If Treasuries Reach 3%, That Would be Big. Here’s Why
The comments below are an edited and abridged synopsis of an article by Brian Chappatta
The global bond market’s primary benchmark, the 10-year US Treasury yield, is knocking on the door of 3%, a level it hasn’t topped in more than four years. That’s more than just a nice round number; higher yields make the burden of everything from mortgages to student loans and car payments even heavier. Some market gurus see it as a turning point with effects that could be felt for years—and not just in bonds. With the Federal Reserve signaling that interest rates are going up even more, investors in riskier assets, like stocks and high-yield debt, are left to wonder if this is how their post-recession party ends.
Chappatta addresses what’s so important about yield; how to determine the benchmark 10-year yield; why yields are rising; why 3% is a milestone; why it matters; whether fixed-income mutual funds will take a hit (yes); how this will affect stocks; and what will happen next.