Failure to Yield

We thought just for an instant
That we could see the future
We thought for once we knew
What really was important
--Til Tuesday

A year ago bond maven Bill Gross argued that 2.6% represented the Maginot line of resistance for 10 yr Treasury yields. Over the past couple of days, 10 yr yields broke thru that level.

In fact, yields are marking multi-year highs across the Treasury spectrum.

To review, higher yields are bearish for stocks because a) fixed income alternatives appear increasingly more attractive to income-oriented investors and b) higher interest rates are deadly for leveraged economies (like ours).

When this begins to matter to stocks in a big way is anyone's guess. That higher yields will matter is not a guess, however.