10-Year Treasury Yield Marching Toward 5%

Back on August 12th we wrote that 4.50% would be a logical yield for the 10 year Treasury. We are there. More recently we have written that a 5-handle makes sense for the 10-year. A 5% yield is around the corner. Too many investors believed the Fed was taking rates close to zero percent in 2024. Too many believed that the Fed would cut quickly in 2024. Neither will happen barring a sharp recession. Yes, the Fed will cut in 2024 as the interest expense on the public debt would be suffocating if the Fed did not cut. Our view is that the Fed will cut rates a bit more rapidly than what was outlined in the September 20th FOMC projections. In the meantime the 10-year Treasury yield will march higher.

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