The Federal Reserve has been cutting interest rates, but long-term Treasury yields keep climbing.

The 10-year Treasury reached approximately 5.3% this week, while the 30-year approached 5.7%—levels not seen in roughly 24 years.

So what's driving rates higher despite Fed cuts?

In this episode of The Weekly Read, Jeff Kikel explores several forces influencing the global bond market, including strong economic growth, enormous AI infrastructure spending, persistent inflation, and government borrowing.

But one of the most interesting explanations may be coming from Japan.

For years, investors borrowed money at extremely low Japanese interest rates and invested in higher-yielding assets, including U.S. Treasuries.

Now, as Japanese rates rise and the yen strengthens, some investors may be unwinding those positions.

That selling pressure could be contributing to rising Treasury yields worldwide.

Jeff explains the yen carry trade in plain English, why the AI investment boom and rising interest rates are connected, and why he's watching the 6% level on the 10-year Treasury as a potential warning sign.

The takeaway: Don't assume Federal Reserve rate cuts automatically translate into lower long-term borrowing costs. Global capital flows matter.

Exit Rich…Retire Free — The Weekly Read

Hosted by Jeff Kikel

Educational content only. Not investment advice.

Companies mentioned in this episode:

• OpenAI
• Apple Inc.
• Delta Air Lines
• JPMorgan Chase & Co.
• Goldman Sachs
• PIMCO
• NASDAQ
• Exit Rich

Hello, everybody.

Welcome to another week of the Weekly Read here with Jeff Kikel

on Friday, October 9th, 2026.

The show today is gonna be called The Global Bond Rout Made in

Why Rates Are Really Rising.

And this is something I've been watching very carefully over the, I

would say the last two to three months.

It's an area that I think I've been trying to make an explanation or an understanding

of what's going on with bond rates.

They have moved so rapidly, so quick, and, the news media and everybody

else, the, their response without really doing any kind of research is

it's because the budgets are high and the government spends too much money.

The government always spends too much money.

And nothing has really changed in the world to make bond

rates move as fast as they had.

And I went back over a, a show that I had done and a blog article that

I had done about two months ago now, August 2nd about the yen carry trade.

And so that's what I wanna cover today.

So stay tuned and we will get rolling here.

So here's a puzzle that's been quietly driving the entire market.

Over the past two years, the Federal Reserve has cut interest rates by a lot.

Yet the rate that matters to you, the 10-year Treasury yield, has risen

just as much, canceling out every cut.

So who's overriding the Fed?

Part of the answer strangely traces back to Japan.

On August 4th, I wrote a blog post about the yen carry trade.

I'll include a link in the show notes so you can go back and take a look at that

and understand what the carry trade is.

So let me set the scene.

This week, the 10-year Treasury pushed to 5.3%,

and the 30-year to 5.7

levels, and these are levels we haven't seen in 24 years, since 2002.

And the market spent the week caught between two fears.

Fear number one, those rising rates.

Fear number two, the AI trade has gotten ahead of itself.

An OpenAI revenue report on Thursday spooked investors and dropped the

Nasdaq more than a percent, and famous names like Michael Burry, we've heard

about, and I have my own opinions, and Ray Dalio, who does hold a lot of

weight, are openly calling it a bubble.

On top of that, Apple slid on reports it's cutting iPhone production.

Big surprise when you just put out a $2,000 s- basically

cellphone, and nobody really wanted to spend the money to buy it.

And Delta missed its earnings and slashed its outlook on high fuel costs.

So high rates, nervous AI, and some cracks in the big names.

But the real story, the one worth understanding, is why those ri-

rates are actually climbing.

There isn't one reason rates are rising.

There are several, and they run from healthy to dangerous.

Think of it as a spectrum.

On the good end, the economy is simply running hot.

Strong growth, strong spending, and a staggering boom in AI spending.

The big tech companies are borrowing and building to tune,

to a tune of a trillion dollars.

More demand for money, plus few savers fewer savers as baby boomers retire and

draw down naturally pushes rates up.

On this end, higher rates are just normal for a strong economy,

so they're not necessarily bad.

In the middle, higher oil prices in the Middle East conflict and

not to forget Russia and Ukraine.

That's the biggest story when it comes to diesel fuel, is Russia and Ukraine,

because Russia is one of the largest diesel producers in the world, and

Ukraine has been bombing their oil fields and production facilities.

So that's caused a lot of this.

This has been the root of this back, four years back when

the conflict started there.

And that is keeping inflation sticky.

And the one almost nobody talks about is the unwinding of the yen carry trade.

Here's the plain version.

For years, hedge funds borrowed money dirt cheap in Japan,

where rates were near zero.

They converted it to dollars, and then they bought higher-yielding US bonds.

Free money.

As long as Japan's rates stayed low and the yen stayed weak both just flipped.

Japan's central bank is now raising rates and the yen is strengthening fast.

Really since early August when I did that yen carry trade blog,

it has been on a rocket ship up.

So those traders are being forced to unwind.

They're selling their US bonds, they're buying back yen at a higher price now,

and they're paying off their loans.

All that forced selling pushes bond prices down and yields up worldwide.

The global bond route made in Tokyo.

And finally, the ugly end of all of this, which is way too much debt

getting punished by the bond market.

France is already there and seeing their currency or seeing their bonds

just get pummeled at this point So what this means, what do we do with this?

Three things.

First, understand that higher for longer isn't just the Fed

being stubborn, it's structural.

A hot economy, a global de-leveraging out of Japan, and record government

debt don't reverse overnight.

Don't bet on a quick return to cheap money.

Second, watch one number, 6%.

Strategist Ed Yardeni and also PIMCO both flagged that the 10-year, when

the 10-year hits 6%, especially really fast, it could cause, in other words,

real cracks in the financial system.

We're at five five three, climbing toward it, but not there yet.

The rough rule, when yields rise above the econo- or the economy's

growth rate, around 6 to 6.5%,

they start to choke it.

And the third, notice the two fears are linked.

The AI building boom is part of what's driving all that

borrowing and pushing rates up.

So AI and interest rates aren't separate stories, they're the same one

So next week, you gotta watch four things.

The 10-year yield, once again, that, and that 6% line, the single most

important number in the market right now.

Japan's central bank, which is expected to hike again, more

fuel for the carry trade unwind.

The big banks, JP Morgan and Goldman report, our clearest read on the

real economy, and whether AI nerves deepen or dip buyers come back.

Rates and AI, same story, two different faces.

So that's your weekly read.

The question this week wasn't whether rates are rising, it's why.

Now, the answer runs from a red-hot economy to a quiet unwind of, in Tokyo.

So watch that 6% line.

I'm Jeff Kickel with Exit Rich, Retire Free.

This is education and not advice