US Treasury 10-year yield chart (%) daily
In the past week, Finances have picked up from where they left off at the end of last year. US 10-year yields continue to rise and we are now closing in on the highest levels seen in 2024 near 4.70%. Last year's high was around 4.74% but that may not be too much of a hurdle if sellers continue to pile up and produce the 4.70% mark this week. Are we on a war path back to 5%?
I wouldn't rule it out, honestly. At some point last year, it would have been unthinkable to speculate on the Fed's rate outlook. But there is only one election result and the tables have turned.
As Adam said hereaddressing the deficit does not appear to be a priority for Trump. And it's understandable, since it's an issue that no president has had a hand in dealing with. In the end, it will just be a matter of kicking the can down the road as always.
If yields go back to 5%, that's a big risk that broader markets need to consider.
The dollar is already in a strong position to start the new year and could collect more tails as a result. Right now, the narrative is largely driven by Trump's strong policy hand. So, therein lies the risk to the markets as we await the establishment later this month.
But if the yield is to fly again from now on, I fear it will be a painful start to the year for risk trades. US indices are already looking a bit scary after yesterday's data. Now, the focus turns to Friday's US jobs report instead.
If the labor market situation is still hot and reaffirms more reason for the Fed to stop, this could be the stimulus that will bring the ball into the bond market to raise yields again. The sale coming up on Friday is going to be a big, big one to watch.
