For more than a year, Wall Street bond analysts have been warning that growing debt sales by the U.S. Treasury will eventually put upward pressure on the 10-year yield, which has been staying comfortably below 4% for some time.
Lately, the 10-year yield has jumped (from 3.65% to 3.92% in the week before press time). If the interest rate that the Feds have to pay to borrow money on 10-year notes rises above 4% for a sustained period, we will see the first step in a return to inflation. That will be bad for everyone. And it will have started because we’ve borrowed too much.