Russell Clark's 10% Treasury yield prediction starts with housing
Brumby Capital's founder says wage growth needed to ease housing pain could force rates far above today's levels.
By Sal Moretti · Money Reporter
3 min read
Russell Clark’s 10% Treasury yield prediction has a blunt starting point: younger buyers cannot afford homes, and fixing that problem could mean years of faster wage growth and higher inflation.
Clark, founder of London-based hedge fund Brumby Capital and author of the Capital Flows and Asset Markets blog, laid out the call this week on the Other People’s Money podcast. He said investors are still using assumptions shaped by the past 40 years, even as politics and economics have shifted away from the low-inflation era.
MarketWatch reported that the 10-year Treasury yield finished Thursday at 4.703%, its highest close since mid-January 2025. The yield moves in the opposite direction of the bond’s price, so a sharp rise would mean a painful fall for bondholders.
Why could Treasury yields hit 10%?
Clark’s argument runs through housing, wages and the return savers need to stay in cash. He said people under 40 face housing affordability as their central economic problem, and that bringing homes back within reach would require wages to climb about 7% a year while house prices stay flat in nominal terms, causing real prices to fall after inflation.
In Clark’s view, that kind of policy path would bring a catch. If wages and inflation are running hot, investors might prefer property and other hard assets unless cash deposits offer a return that beats inflation.
A real interest rate is the interest rate after inflation is stripped out. Clark said a real rate of about 3% would be needed to keep money in deposits rather than pushing it into real assets.
Put together, Clark said roughly 7% inflation plus a 3% real return gets investors to a 10% interest rate. On the podcast, he said that remains his target for the Treasury yield.
What changed from the low-rate era?
Clark tied the shift to the unwinding of the financial setup associated with the Thatcher-Reagan period of the 1980s. He argued that developed economies spent decades favoring capital over labor, helped by globalization, inexpensive manufacturing, large pools of savings and limited wage pressure.
That mix helped pull inflation and interest rates lower, according to Clark. He said the current backdrop looks different because governments are spending on infrastructure, rebuilding supply chains closer to home and trying to answer voter anger over living costs.
MarketWatch also reported that renewed oil strength has been feeding inflation worries and pushing benchmark borrowing costs higher. In Friday market action cited by MarketWatch, Treasury yields were near recent highs, U.S. stock-index futures were up, the dollar index was slightly lower and gold futures traded around $4,056 an ounce.
Who would feel the pain first?
Clark sounded less alarmed about big technology companies linked to the artificial-intelligence boom. He argued those companies are likely to keep spending to protect their competitive positions, even if borrowing costs rise.
He pointed instead to private equity and private credit as areas most exposed to a world without cheap money. According to Clark, those businesses expanded during a long stretch of declining rates, plentiful leverage and easy refinancing.
If rates rise far enough, Clark said, models built around rolling debt into cheaper financing would look more vulnerable. For investors used to Treasury yields near 5% feeling spicy, his 10% call is a very different menu.
This story draws on original reporting from MarketWatch.