Shooting pains
US 10-year treasury yields, a key measure of the interest cost for future government borrowing, have shot up to their highest levels in 16 years. The benchmark yield leaped yesterday, surpassing 4.8%, driven by the latest job report from the US Labor Department. The survey revealed a surge in job openings, raising the expectation that the Federal Reserve will have to maintain an interest rate regime of “higher for longer”.
The move spooked investors, with the S&P 500 Index dropping 1.4% and the tech-heavy NASDAQ shedding nearly **2%.**
Beg to borrow
Apart from hurting your stock portfolio, treasury yields that shoot up and stay up are a big deal for the government’s ability to borrow more debt. Borrowing a few extra billion, or trillion, with a promise to pay it back in 10 years will now come with a 4.8% interest rate for Uncle Sam — while only 3 years ago, the rate was just 0.8%.
