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Two-Year U.S. Yields at 2008 Highs Are Scarier Than a 3% 10-Year

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(Bloomberg) -- With all the focus on the 10-year Treasury yield breaching 3 percent, investors may be missing the most important movement afoot in the world’s biggest debt market.

It’s the spike higher in U.S. short-term rates that’s really flashing a warning signal for companies, share prices and consumers, according to Peter Tchir at Academy Securities Inc.

The surge in two-year yields to the highest since 2008, is “the scariest chart for investors,” said the firm’s head of macro strategy. One-year bill rates are also the highest in almost a decade.

“The 10-year yield might attract all the attention but higher short-term yields are more problematic, ” Tchir wrote in a note Wednesday. “Consumers who want to purchase large items are faced with higher costs. Investors can allocate to less risky bonds and out of dividend stocks and still get some yield.”

“It’s absurd that everyone is falling all over themselves talking about the 10-year at 3 percent,” said Jefferies economist Thomas Simons. “How about the one-year bill at 2.20?”

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