Trading Day-US yields cross 5% threshold

The yield on every US Treasury note or bond, with the exception of the two-year note, traded above 5% on Wednesday, with the five-year yield crossing that threshold for the first time since 2007. The two-year yield is only 5 basis points away, so it's conceivable that the whole US Treasury yield curve could be above 5% later this week. That would also be a first since 2007.

It's only a number, but it could have psychological significance. It could tempt all kinds of investors to diversify away from expensive stocks and lock in attractive returns on 'risk-free' assets (the real yield on 10-year TIPS is 2.78%, the highest since 2008).

On the other hand, today's 5-year auction was awful. These yields are a reminder that we are in a brave new world, where the cost of capital is high and seemingly heading higher. Debt servicing — for consumers, businesses and the Treasury — is getting more expensive. Buckle up.