10Y Treasury
The most important rate in finance. It anchors mortgage rates, corporate borrowing costs, and how stocks are valued. Rising 10Y = headwind for risk assets.
Why it matters
The single most important number in asset pricing. The 10Y yield is the discount rate against which ALL risky assets are valued. When the 10Y rises, stocks (especially growth stocks) become less attractive on a relative basis. It also directly influences mortgage rates.
How to read it
Below 2%: extremely accommodative (rare, signals macro fear). 2-4%: historically normal. Above 4%: restrictive, puts pressure on equity valuations. However, the real yield (nominal minus inflation) matters more than the nominal level — 4% with 2% inflation is very different from 4% with 5% inflation. The rate of change matters more than the level — rapid moves cause market disruption.
Related terms
Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods · Bullet vs Barbell
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