The 10-year Treasury Note is the most popular debt instrument in the world. They are traditionally used as hedges against market uncertainty, as their returns are modest but effectively guaranteed.

This view has begun to change, however, due to uncertainty around the impacts of the Trump administration’s budget bill. The national debt is expected to pass 125% of GDP in the coming years, raising concerns about the government’s ability to repay. If investors begin to lose faith, the government could be forced to increase yields to find buyers, leaving it with even more debt and less ability to repay.

So far, this is just a cloud on the horizon. Treasury yields are expected to hover at about 4.26% over the course of the year – a steady increase from 2020. Higher yields indicate broad confidence in the market, barring concerns about the national debt. The treasury secretary, Scott Bessent, is focused on getting the 10-year treasury rate down to around 4% by summer. This will be a key catalyst to growth in the construction and manufacturing sectors.