US 10-Year Treasury Yield Rises to 4.63%
The Kobeissi Letter noted that the 10-year Treasury yield has erased all declines since the signing of the "memorandum of understanding," currently rising to 4.63%, close to the high since January 2025.
The rapid rebound in yield reflects market adjustments to inflation or fiscal expectations, with selling pressure on bonds pushing prices down.
Investors selling Treasuries are driving up yields, with funds flowing into higher-return assets or safe havens, putting pressure on mortgage institutions and homebuyers, while banks and fixed-income traders benefit from increased volatility.
Source: Public Information
ABAB AI Insight
The US Treasury yield has experienced several rapid rebounds during the aggressive interest rate hike cycle from 2022 to 2023, similar to the market's repeated pricing of inflation risks during the Federal Reserve's policy shift, raising borrowing costs and impacting the real estate cycle.
On the capital path, rising yields prompt pension funds and asset management institutions to adjust duration allocations, shifting funds from long-term bonds to short-term instruments or equities, while the Treasury's issuance pressure may further increase supply, reinforcing the interest rate path.
Similar to the fluctuations in the yield curve during the Fed's balance sheet reduction in 2018, or similar events in early 2025, the US bond market is currently in a transition phase from low-rate legacies to high-rate fluctuations, with increased sensitivity in the mortgage market.
Essentially, this reflects regulatory changes and capital concentration, with a reset of market expectations under coordinated fiscal and monetary policies, leading to capital concentrating in anti-inflation assets, while also exacerbating real estate financing costs and reshaping household and corporate leverage structures.
ABAB News · Cognitive Laws
A rebound in yields is a precursor to rising borrowing costs.
Memoranda are easy to sign, but market pricing is hard to change.
The greater the selling pressure on bonds, the longer the real economy will be under pressure.