Sep 10, 2026 · 56 min
Lebowitz sees 5% Treasury yields as a possible turning point
Bonds To Reverse Soon As Yields Approach 'Line In The Sand'? Michael Lebowitz
The episode examines whether rising yields reflect durable economic pressure or temporary narratives, with consequences for portfolios, retirement income, and monetary policy.
- 1Market narratives are lifting Treasury yields, but Lebowitz argues fundamentals could drive them lower over the next several years.
- 2A 5% 10-year Treasury yield could attract institutional buyers, pressure stocks, and create a market-based floor.
- 3Higher bond income gives retirees and planners more room to lock in goals without relying entirely on equity returns.
Don't miss
Lebowitz explains why a 5% 10-year Treasury yield could trigger institutional buying and become a market-based floor.
The brief
Mike Leibowitz separates the narratives pushing 10-year Treasury yields higher—tariffs, geopolitics, inflation, employment, and supply—from fundamentals that may eventually pull them lower.
Lebowitz identifies 5% as a potential line in the sand: institutional buyers could step in, while higher yields pressure stocks and redirect capital toward bonds.
The bond case rests on current income plus possible price gains if yields fall, though Real Investment Advice is waiting for technical and economic confirmation before extending duration.
A possible Fed rate hike, changing employment conditions, and AI’s mix of growth and disinflation complicate the outlook, making incoming data more important than any single narrative.
The conversation ends with a practical focus on retirees and financial plans: current yields may help investors match future goals without needing to outperform equities.
What was said on this episode
24 statements · 12 positive · 9 negative · 1 mixed · 2 neutral
A 5% ten-year Treasury yield could trigger concern or intervention across markets and policymakers.
“10-year bond yields at 5% is potentially a line in the sand for both the economy, the stock market, and definitely the Treasury and possibly the Fed.”
Listen at 0:09
Ten-year Treasury yields may have limited further upside in the short run.
“In the short run, that may be our maximum upside in yield.”
Listen at 0:24
Economic or stock-market weakness could cause interest rates and bond yields to decline.
“if the economy falters, the stock market falters, that could induce rates to start heading down, yields to start heading lower.”
Listen at 0:29
Bond fundamentals historically drive bond yields.
“historically, fundamentals drive yields.”
Listen at 2:15
Bond yields ultimately revert toward their fundamental drivers.
“Ultimately, price, or in our case, yield, comes back to fundamentals.”
Listen at 3:12
Current bond-market fundamentals do not justify rising yields.
“the fundamentals driving the bond market don't warrant. rising yields”
Listen at 13:01
Long-run fundamentals indicate bond yields are already too high.
“the fundamentals that really in the long run set yields are telling you yields are already too high.”
Listen at 16:17
Market-linked borrowing rates have risen 50–75 basis points.
“they've gone up significantly, 50 to 75 basis points.”
Listen at 16:42
Large institutional investors will likely buy bonds aggressively near 5% yields.
“insurance companies, endowments, you know, they're the largest institutional money managers. will likely be willing to chomp at 5% to take it in.”
Listen at 19:19
Falling stocks could redirect capital toward bonds for safety.
“if stocks start heading lower, some of that money say, you know what, I want the safety of bonds.”
Listen at 20:01
A CAPE ratio around 41 implies near-zero equity returns over the next decade.
“CAPE is sitting at like 41, implying that returns for the next 10 years are going to be zero.”
Listen at 22:23
Falling yields and stocks could let bondholders sell profitably and buy discounted equities.
“you have that free option to sell the bond. take your price profit and now buy stocks on sale.”
Listen at 25:01
Good-quality corporate bonds can already provide yields of at least 5%.
“a lot of corporate yields are already over 5% because they're at a spread to treasuries. So you can easily get 5% in good corporate names.”
Listen at 26:06
Buying ten-year bonds near 4.5% may be preferable with confidence yields will fall toward 2.5%.
“we buy, let's just hypothetically say the tenure at 450 versus 5%, but a lot more confidence that we're at 450 going to 250”
Listen at 28:52
Multiple Fed rate hikes could create a significant policy mistake.
“I think he runs the risk of a big policy mistake if they hike, especially if they hike multiple times.”
Listen at 36:02
A no-hike decision could push ten-year Treasury yields to 5%.
“if he comes out and they do nothing, The market may say he's being weak on inflation, and that may be what gets 10-year yields to 5%.”
Listen at 36:38
The Fed chair is unlikely to raise rates in September.
“I personally don't think he's going to raise rates this September.”
Listen at 38:39
If the Fed hikes now, it will likely cut rates in 2027.
“I think that's most likely.”
Listen at 40:24
AI will create both economic growth and disinflation, at different stages.
“I think the answer is, yes, it creates growth. And yes, it creates disinflation.”
Listen at 43:22
Bond yields are expected to trend downward over the next several years.
“your default over the next couple of years is you expect bond yields to be trending downwards, not upwards.”
Listen at 44:01
Bonds make sense as part of a diversified investor portfolio.
“I think this makes sense as part of your portfolio.”
Listen at 45:11
Holding a five- or seven-year bond to maturity can provide roughly 5% annually.
“buy a five or seven year bond and just buy the actual bond. Tell yourself you're holding it to maturity. Worst case, you're going to make 5% for five or seven years or whatever it is.”
Listen at 45:38
Investors can earn approximately 5% on several bond maturities and corporate bonds.
“I can make 5% on a 30-year bond, on a 10-year corporate bond, on a five-year corporate bond.”
Listen at 48:20
A financial plan may show a 98% chance of meeting goals at 5% returns.
“you have a 98% chance if you can earn 5% or more of meeting your goals.”
Listen at 51:18
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.