Treasury yields hitting 5% may not break markets now — but the clock is ticking

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., Sept. 15, 2026. Jeenah Moon | ReutersThe 10-year Treasury yield hit its highest level since 2007 on Tuesday, pushing borrowing costs deeper into territory that could expose some of the financial system's weakest links.The question for investors is increasingly not whether a 5%-plus yield causes something to break immediately, but where the strain will emerge if rates stay there, industry veterans said.Market experts echoed that a 5%-plus benchmark yield will expose vulnerabilities gradually, as higher borrowing costs work their way through housing, commercial real estate and heavily indebted companies. The biggest danger comes if rates stay elevated long enough to force borrowers that loaded up on cheap debt during the zero-rate era to refinance at sharply higher costs. "Note that 5% doesn't break anything on the day it arrives. It breaks things twelve to eighteen months out, when the refinancing must happen at the new rate," said Jack Ablin, chief investment officer at Cresset Capital. "The risk isn't the level we're looking at this morning, however, the longer we stay here, the more difficult ...