10-Year U.S. Treasury Yields Above 5%

Today the yield on the 10-year U.S. Treasury Note rose above 5% for the first time since 2002. Less than a year ago, the yield was less than 4%.

Ultimately, this is a sound development that will help limit global economic imbalances, but this will mean short-term pain for the over-indebted U.S. households and the over-indebted U.S. federal government as their interest costs now rises sharply.

And perhaps most significantly, this could help burst the housing bubble, something which will mean a recession in America, unless the U.S. somehow will be so lucky as Australia and get a boost from some other source that counteracts the negative effects of a bursted housing bubble.