The Corner

Economy & Business

Ten-Year Bond Yield Creeps toward 3 Percent

Statue of George Washington overlooking Wall Street (Mike Segar/Reuters)

Does it matter if the the ten-year bond yield hits 3 percent? We might be about to find out.

At this writing, the yield on a ten-year U.S. treasury bond had reached 2.957 percent, its highest level since January 2014. That caps off the worst week for bonds since February 2, which happens to have been the week before the February stock-market correction (when equity markets shed a significant chunk of their value, putting an end to months of low market volatility).

The ten-year bond yield reflects market expectations for the future level of inflation and future path of monetary policy. Higher bond yields also mean higher borrowing costs for corporations. For these reasons, and others, the financial world has been anxiously awaiting the day that the ten-year yield reaches 3 percent. If it gets that high, the economy could be in trouble, many fear. In January, Bloomberg warned that “market euphoria may turn to despair” if the yield reaches 3 percent. Trader Art Cashin told CNBC in February that the mark is like the “third rail” and touching it could mean “all hell breaks loose.” Investor Jeffrey Gundlach told his clients in March that reaching the 3 percent mark would end the bull market in equities. Are we hurtling toward disaster?

Probably not. By every measure, nothing significant has changed about the underlying health of the economy within the last week. Financial journalists and bombastic traders have a tendency to make mountains out of molehills when it comes to financial markets. Even plenty of market observers dismiss the notion that the 3 percent yield is a magic number. Still, over the coming weeks, it will be worth watching to see whether the ten-year yield hits 3 percent — and whether that matters.

Most Popular


The Real Reasons American Evangelicals Support Israel

It never fails. Whenever a Republican president makes a controversial or contentious move to support Israel -- such as moving the American embassy to Jerusalem, or yesterday’s decision to recognize Israeli sovereignty over the Golan Heights -- you’ll see various “explainers” and other stories that purport ... Read More
White House

Mueller Report Delivered to Attorney General

Special Counsel Robert Mueller on Friday evening delivered a report to attorney general William Barr detailing his nearly two-year investigation into Russian interference in the 2016 election and possible collusion with the Trump campaign. Barr will now be tasked with deciding what information from the report ... Read More