US bond yields have hit a five year high—bringing the threat of higher interest rates, costlier home mortgages and a slowing economy, the Wall Street Journal reports. The benchmark 10-year Treasury note rose to 5.25 per cent yesterday. Rising bond yields echo throughout the economy, making stocks less attractive to investors.
That was reflected in a 130 point—or 1%—drop in the Dow yesterday. One investment banker told the Journal: "Many people have rationalized their involvement in risky assets like stocks by saying that bond yields are low, and now they're rising and catching people off guard."