Why 5% Rates Aren’t Scaring the Market

Interest rates are climbing, but the market doesn’t seem particularly bothered. Greg and Doug dig into why the 10-year Treasury has pushed above 5%, arguing that stronger economic growth, persistent inflation, and the massive AI infrastructure buildout may be doing more to drive rates than fears about U.S. debt. They also look at the relationship between Iran, oil prices and inflation; why higher rates may hurt traditional parts of the economy without slowing AI investment; and what the approaching midterm elections could mean for markets. Finally, they examine the historically strong stretch that tends to follow the first three quarters of a midterm year, and why falling political uncertainty could provide another tailwind for investors.

Key Takeaways

00:17 — Why 5% interest rates aren’t scaring the market

04:57 — Iran, oil and the inflation expectation

06:39 — Are the U.S. and Iran moving closer to a deal?

08:02 — Why higher rates aren’t slowing the AI buildout

11:15 — The historically strongest stretch of the midterm cycle

14:45 — Why markets like falling uncertainty

View Transcript

Links:

• In midterm years, October is usually the best month for stocks, with gains 73.7% of the time

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