Bond Yields Have Risen Above 5% — Two Ways to Look at It

# What happened

# Two pictures: yields and the yield curve

One picture is the level of long-term yields themselves. A chart shared in the post and the author's note point to the 10-year moving back above 5% territory. The other picture is the yield curve's signaling history: the 10–2 year and 10-year–3-month inversions in 2022–24 that historically preceded recessions.

By timing, the author notes the economy is well past the usual window where those inversion signals would have forecast a recession. The post lists how many months have elapsed since different inversions and their renormalizations: 50 months past the 10–2 inversion, 38 months past the 10y–3m inversion, and respective months since they returned to normal.

# Why the inversion may have been a false positive

Commenters and the author offer several concrete reasons why the inversion did not lead to a recession:

• Real short-term rates were unusually low during the inversion period. The real yield on three-month bills barely rose above 2.5%, and the 10-year real yield never exceeded that level. Historically, inversions have coincided with higher real yields.

• The causal link that ties inversion to recession is often high borrowing costs. If borrowing costs are not meaningfully elevated in real terms, the transmission to a recession can be weaker.

• The large pandemic-era fiscal stimulus and accumulated household savings created demand and labor-market momentum that helped offset contractionary policy moves later on.

# Policy and uncertainty as contributors to higher yields

The post and several comments list policy moves and geopolitical developments that could push yields up by raising expected deficits, risk premia, or inflation expectations. Those items include:

• Large tax cuts implemented in recent years.
• An open-ended military engagement referenced in the post.
• Aggressive immigration enforcement and mass deportation policies cited by the author.
• Tariffs and heightened policy uncertainty more broadly.

The post implies that these fiscal and political developments contribute to the current elevated level of long-term yields.

# What readers debated in the comments

# Bottom line

Long-term Treasury yields have risen above 5%, and the post uses that as a springboard to reassess the predictive power of yield-curve inversions. Contributors argue the inversion failed as a recession signal because real short rates were low and pandemic-era fiscal and household cushions offset tightening. Separately, recent fiscal and geopolitical policy choices are presented as upward pressure on nominal long-term yields.