The 10-year Treasury unwinds its rally

The round trip

Last October the 10-year averaged 4.06 percent and the direction of travel looked settled. Nine months later the July average is 4.52 percent, a 46 basis point climb that has been almost uninterrupted: 4.14 in December, 4.25 in March, 4.48 in May. The last time the monthly average sat this high was January 2025, at 4.63 percent, and the peak of the cycle remains October 2023's 4.80.

The explanation

Inflation is the simplest one. The CPI is up 4.2 percent in the year through May, and a 10-year note yielding 4.06 percent against 4 percent inflation is a hard sell. The repricing looks less like a growth scare and more like the bond market taking the inflation data at face value.

Why it compounds

Every month the yield stays here, more of the federal debt rolls into it. The average rate the Treasury pays on the whole stock keeps grinding upward, which is how a half-point move in the market becomes a decade of higher interest bills.