Big breakout: US 10-year yields up 16 basis points to the highest since 2007

The useful part

US borrowing costs are racing higher and are now at the most-costly levels since 2007. That's a heavy price to pay for the $40 trillion Those costs feed indirectly into mortgage rates, corporate borrowing costs and the discount rate for equities. It feels like a dam is breaking and that isn't good for risk assets or confidence in policymakers.

How it works

• It's only one data point but it could snowball as confidence in the growth outlook improves.
• What frightens me today is how sudden and global the move has been.
• Technically, the long-term monthly chart highlights 5.33% as the financial crisis high and then there isn't much stopping a run to 6%.
• This is the kind of thing that will make Trump explode but there isn't much anyone can do about it.
• The Treasury bought another $6 billion in long-dated bonds with bills today but it's a drop in the bucket and has lost its shock value.

What to take from it

Ending the war in Iran and getting oil prices down would be a big help but it's going to take time to get anything flowing and the market is suddenly skeptical of yesterday's pronoucements with oil up $2.11 to $92.67. The trigger for today's moves was the US S&P Global PMI as it hit the highest in five years. The composite reading was the highest since 2015 excluding the post-pandemic period.

Details worth keeping

This article was written by Adam Button at investinglive.com.