The 10-year Treasury yield hit its highest level since 2007 on Tuesday, pushing borrowing costs deeper into territory that could expose some of the financial system’s weakest links. Market veterans stress that the 5% threshold breaks nothing on the day it arrives but creates strain twelve to eighteen months later when bond refinancing occurs at significantly higher rates. Housing appears as the most vulnerable sector, with mortgage rates potentially approaching 8%, freezing transactions rather than triggering massive defaults. Companies and commercial real estate face a critical maturity wall: debt raised at 2-3% must now be refinanced at 6-8%. Duration matters more than the exact yield level, with a sustained stay above 5% for six to twelve months becoming increasingly difficult for markets to absorb.
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