10 Year Treasury Over 3.00%, Is this a peak or a stepping stone?

Treasury yields are rising due to a combination of factors: easing of geo-political issues (North Korea-U.S. tensions, tariff/trade war); positive economic reports (consumer confidence, home sales) and inflation rumblings. The 10 year T hit 3.01% in late 2013 and dropped to 2.50% by mid-year 2014. That point is the recent high since 2011. Is 3.00% just a data point on an upward trend to (?) Or will inflation and growth slow (maybe because of high rates)? Monday’s market sell off to Caterpillars earnings report was interesting. The company indicated that the economy and earnings were at a “high water mark” and a leveling off or slowdown is looming. Investors fear a scenario of slowing growth and rising rates, it’s reminiscent of “stagflation.” Another interesting aspect of the report is it noted rising commodity costs along with an inability to raise product prices accordingly. This dis-connect may come up in future Fed debates about rising rates and what constitutes inflation. Commodities, finished goods and wages may disconnect in the “new normal” as technology and information access have changed the game. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners