The 10-year Treasury yield has jumped from below 4% in February to nearly 4.7%, while the 30-year has topped 5.3%, prompting Jim Cramer to tell investors the bond market can no longer be ignored.
Higher long-term rates are weighing on equities by offering stronger competition for investor cash and cutting the present value of future profits; the S&P 500 has fallen in five of the past seven sessions.
Cramer tied the rate pressure to stubborn inflation, oil prices lifted by the Iran war, and heavy AI-related borrowing as tech companies fund data centers and flood markets with corporate debt.
The Treasury Department more than doubled planned buybacks of longer-dated debt last week, but yields resumed climbing after a brief dip, underscoring Cramer's view that Treasury cannot fix a problem tied to $40 trillion in national debt.
Cramer said a lasting drop in long-term yields will require inflation to ease, something he argued is difficult while energy prices stay high and the Strait of Hormuz remains disrupted.
Is the massive debt fueling the AI boom secretly sabotaging the stock market by driving Treasury yields to dangerous new highs?
With tech giants hoarding trillions for data centers, will their insatiable borrowing trigger a catastrophic credit crisis before AI becomes profitable?
How will the hidden trillion-dollar AI debt web impact your portfolio as tech giants battle the US government for investor cash?