The 10-Year Just Hit 5%. Protect Cash, Then Choose.
The U.S. 10-year Treasury yield climbed to roughly 5.25% on September 28, its highest point since 2007. That came less than two weeks after the Fed raised its policy rate to 3.75–4.00%. Mortgage rates are back above 7%, and almost every long-term loan an organization takes on is priced off that benchmark.
This isn't only bad news. Yields this high partly reflect an economy that's still spending and investing. Manufacturing activity beat expectations in September, and the Fed describes growth as solid. The market is pricing in that demand.
The catch is that strength and pressure are arriving together. Brent crude is above $100 with the Strait of Hormuz largely closed, and deficits and heavy corporate borrowing are pushing rates up too. With geopolitics shifting weekly, it's hard to tell whether any drop in oil will be a one-off dip or a lasting decline. A short dip likely won't do much to long-term rates. A sustained decline could. Until that's clear, plan as though money stays expensive.
Expensive money doesn't punish ambition. It punishes trying to do everything.
What that means in practice:
Preserve cash first. Before cutting anything, know your runway and your refinancing dates. Companies that took on cheap debt in 2021 are the most exposed if rates stay here.
Triage the portfolio. Find the 20% of initiatives that will deliver 80% of the results and fund those properly, rather than trimming everything a little. Don't announce cuts by email: map how work actually flows first, so you know which projects carry the load.
Tighten governance around outcomes. Every initiative that survives needs one owner, a clear outcome and a performance measure, reviewed in 90-day cycles rather than once a year.
Get lean before you scale. Expensive capital compounds inefficiency, because every wasted step now costs more to finance. Fix the waste before you put more money behind it.
Public sector leaders face their own version of this. Higher yields push up government debt-service costs, which leaves less room in the budget for everything else.
Working out which initiatives make the cut? We're glad to talk it through: eightygroupllc.com/contact
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