The 10-year Treasury yield hit 4.75% Monday. That’s the highest since November 2025. And it’s causing ripple effects across the economy.

The trigger was a double blow. First, Federal Reserve Governor Christopher Waller said over the weekend that inflation progress has “stalled” and the committee needs “several more months of favorable data” before considering cuts. Then, oil’s surge above $82 added fuel to the fire — higher energy prices feed into headline inflation, which keeps the Fed on hold.

The 30-year fixed mortgage rate jumped to 7.35% according to Mortgage News Daily, up from 7.18% last week. That’s the highest since early March. For context, the monthly payment on a $400,000 mortgage at 7.35% is roughly $2,750 — versus $1,800 when rates were at 3% in 2021. That’s a $950 difference. Every month.

The housing market is feeling it. The spring selling season was already sluggish — existing home sales in April were at a 3.98 million annual rate, the lowest since July 2025. Monday’s rate spike will make May even worse. Homebuilders are taking notice: the NAHB Housing Market Index is due tomorrow and expectations are for a decline. The builders’ stocks were mixed today — D.R. Horton -1.2%, Lennar -0.9%, PulteGroup -0.7%.

Corporate borrowing costs are also climbing. The investment-grade corporate bond spread widened 4 basis points to 117 basis points over Treasuries, according to ICE BofA data. That’s the widest spread since the tariff escalation on May 12. The high-yield spread jumped 12 basis points to 382 basis points. For companies needing to refinance debt this quarter — and there’s roughly $180 billion in IG bonds maturing in Q2 — the window is getting narrower and more expensive.

Auto loan rates are moving higher too. The average rate on a 60-month new car loan hit 7.82%, up from 7.65% a month ago. That adds roughly $15 to $20 to the monthly payment on a $40,000 vehicle. Consumer discretionary spending is already showing signs of strain — retail sales data from last week came in softer than expected, and the University of Michigan consumer sentiment survey dipped to 76.3 from 78.9.

Credit card APRs are already above 22% on average. With the prime rate tied to the Fed funds rate at 4.50%, there’s no near-term relief for revolving credit users. The total U.S. credit card balance stands at $1.17 trillion, and delinquencies have been creeping higher — the 90-day+ delinquency rate is at 3.4%, up from 2.9% a year ago.

So, the borrowing cost environment is tightening across every major category — mortgages, corporate debt, auto loans, and credit cards. And with oil prices rising, the Fed’s path to rate cuts just got harder. The CME FedWatch Tool now shows only a 40% probability of a September cut, down from 54% last Friday. November is the new line in the sand.

For equity markets, higher borrowing costs mean higher discount rates, which compress valuations — particularly for growth and tech stocks. But the real economy impact takes longer to show up. Consumers will feel it through higher payments trickling over the next 2-3 months as variable-rate debt resets. Companies will feel it when they go to refinance.

The bottom line: Borrowing costs are the highest in seven months and heading higher. The Fed isn’t cutting anytime soon. And the combination of expensive money and expensive oil is a headwind the economy hasn’t had to deal with since 2023.