Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Thursday. Today is Thursday, May 21st.
And I want to share something interesting with you this morning.
Back in November 2024, I sat down and recorded a video about a situation that’s eerily similar to the situation we are in today.
It was about the bond market, Treasury yields, and why the US government's debt situation was heading somewhere dangerous.
Nobody was really talking about it then.
What I Said
I said 30-year bonds were mispriced.
Nobody in their right mind was going to lend the US government money for 30 years at those rates — not with the spending binge we were on and inflation still running hot.
I said two-year notes could march to 5%.
I said the refinancing risk was building — that every time those short-term notes came up for renewal, we'd be paying higher and higher interest on them.
I used Paul Tudor Jones's analogy at the time: lending money to the US government right now is like lending $40,000 a year to someone who makes $100,000 a year and already owes you $1 million.
And they keep borrowing more every year.
What would you require to lend that person money?
Personally, I'd require credit card debt rates.
That's how bad the situation actually is.
Fast Forward Eighteen Months
The 30-year yield just hit 5.12% — near 20-year highs.
The 10-year is at 4.59% — the highest in 12 months.
The Treasury just issued $25 billion in new 30-year bonds at 5.046% — the highest since 2007.
The refinancing snowball I warned about is rolling.
Every time we roll over that short-term debt at higher rates, the interest burden grows.
We are adding $7 to $10 trillion in refinanced debt every year now.
The math is compounding in the wrong direction.
Why This Matters to You
Remember the seesaw.
Yields go up, stock prices go down.
Yields go down, stock prices go up.
The 10-year yield is the most important number in the world for your portfolio.
And right now it is sitting right at the edge of the level — 4.5% — that historically signals serious pressure on equities.
When I recorded that video in November 2024, this was a warning about something coming.
Now it's here.
The Bottom Line
This is not a new story.
It is the same story — just further along.
The people who understood it then were positioned.
The people who understand it now still have time to act.
Anyway, that's all I have for you today.
Have a wonderful Thursday.
I will see you tomorrow.
“The Buck Stops Here,”
Found this helpful? Share it with others.
Written by Dylan Jovine