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Two key indicators with spooky significance | CNN Business

By Thomas A. Smith

New York CNN    

There are two numbers floating around econ media headlines lately that are (as we journalists love to say) psychological milestones.

The numbers: five and eight. As in 5% yield on the 10-year T-bill, and 8% interest on the 30-year fixed rate mortgage. The two figures are closely related, and both are inviting ominous historical comparisons.

The 10-year Treasury yield, which goes up as prices fall, is flirting with 5% for the first time since 2007 (that s ominous comparison No. 1). The yield briefly breached the 5% last week, and again on Monday, before falling back down to 4.83% by the end of the trading day.

There are a few reasons that the 10-year has advanced so quickly since last year, when it sat around 4%, my colleague Nicole Goodkind writes.

  • Strong economic growth and elevated inflation tend to push yields higher.
  • The US Treasury has issued a lot of government debt in recent months, and more could be coming soon.
  • Those things bring down bond prices and push yields higher, attracting buyers.

via www.cnn.com