The yield on the 10-year US government bond surged above 5.2% last week, reaching its highest level since 2007.
That move has major implications for stocks, property, borrowing costs and household wealth. But the most important question is not simply why yields have risen. It is where they go from here.
There are several widely discussed explanations for the rise in long-term interest rates: enormous government budget deficits, heavy borrowing to finance the AI boom, and concerns about foreign demand for US government debt.
I believe something more important is driving yields higher.
Inflationary pressures are building from several directions at once. Energy prices—especially diesel—have surged. Tariffs and reindustrialization are pushing up costs. The AI investment boom is putting enormous pressure on electricity, equipment, commodities and skilled labor. And the Fed has already begun raising short-term interest rates again.
In this new Macro Watch video, The Road to 7% Yields and a Stock Market Crash, I examine what is really driving long-term interest rates higher, what is likely to happen during the months ahead, and then look much further out at how today’s economic and geopolitical forces could reshape financial markets over the next five years.
The consequences for stocks, bonds, property, gold and household wealth could be enormous.
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