THE BIGGEST NUMBER IN THE WORLD
Our chart of the week is an update on one of the most important “must watch” numbers in the world… the yield on the 10-Year U.S. Treasury note.
The 10-year yield is the most commonly tracked gauge of how much Uncle Sam must pay creditors to borrow money. A rising yield indicates creditors are demanding higher rates to compensate them for the risks of loaning money to the sovereign equivalent of a 15-year-old with daddy’s credit card. A falling yield indicates a sluggish economy and no worries about inflation or the creditworthiness of the U.S.
Some analysts, like our colleague Porter Stansberry, believe our creditors will demand much higher rates of interest soon… rather than the current 3.82% yield.
As you can see from this week’s chart, the 10-year yield just jumped toward a new 12-month high… and is close to an upside breakout over 4%. If this breakout happens, it’s the market saying, “Yes, Porter is right. Creditors are requiring more yield… and I’m sending rates higher.”
– Brian Hunt