Yield Shock! Why It’s Not Priced-In

In the wee hours this AM, the 10-year UST nearly kissed 3.12%. That happens to be a 69% increase from the average rate of 1.84% posted during CY 2016.

We offer these specific data points because they provide a striking (and obvious) refutation of the current Wall Street noise track. That is, the talking head refrain on bubble vision that stocks are to be bought because the economy’s good, earnings are good and rising yields are all priced-in.

We’d say, not so fast because transparency is one thing—but costs and cash flows are something altogether different. For example, a literate frog might well read the thermostat and know the water is approaching the boiling point but is not quite there.