Peter Schiff Says the 10-Year Treasury Will Top 5.5%, Mortgage Rates Will Pass 8%

Peter Schiff is sounding the alarm on bonds again. The economist says the 10-year Treasury yield will soon break 5.5%, and if it does, mortgage rates will climb above 8%.
The 10-year is already near 5.3%, its highest level since 2002. The 30-year Treasury has touched 5.62%. Two weeks earlier, 5% was supposed to be the ceiling.

Yields are rising on bad news

What has Schiff most concerned is how bonds are behaving. Yields are rising even as economic data disappoints. Consumer confidence collapsed to 81.9, the lowest reading in 12 years and worse than the pandemic trough. Job openings missed. Yields rose anyway.
Schiff warns that if a weak jobs number is met with still more selling in bonds, the orderly grind lower could become a crash. He sees the housing bubble as bigger than 2008 on a price-to-income test.

The 8% mortgage era

Mortgage rates sit near 7.4% today. Schiff sees them headed past 8%. Thirty-year mortgage rates hit 7.24% in mid-September, and the 40-year era of ever-falling rates, from 18% in 1981 to 2.65% in 2021, is officially over.
The damage is already visible. U.S. real estate stocks just hit their lowest level ever relative to the S&P 500, wiping out all the outperformance built up during the early 2000s housing bubble.

Housing is cracking

Homes now cost five times household income, with down payments averaging 13.8%. Fannie Mae and Freddie Mac shares are down about 75% while the government buys more mortgage bonds to paper over the break.
Schiff is blunt about where the sector goes from here. Replying to the record-low print on real estate stocks, he said the industry is dead: it lived by ever-falling mortgage rates and government subsidies, and it is now dying by the reversal of the same dynamics.

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Options market and stocks to watch

Rising yields are a headwind for anything rate-sensitive, and real estate is ground zero. The iShares US Real Estate ETF (IYR) to SPY ratio just hit a record low of 0.122, down from 0.525 at the 2007 housing peak. Watch for put flow on IYR, homebuilders like DHI, and the GSE names as mortgage rates push toward 8%.
Higher yields also bite growth stocks, where valuations stretch hardest. If the 10-year breaks 5.5% as Schiff expects, expect continued pressure on long-duration tech and megacaps like NVDA, and watch the bond proxy trade in the options market for the next direction.
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