Rates are up, and that’s bad news.

Coming into 2026, the promise was for lower interest rates and a booming economy.

But reality has been far different. The 10-year treasury yield, which is a proxy for everything from mortgages to corporate debt, continues to rise and is now at a level not consistently seen since 2001.

And mortgage rates have spiked more than a full percentage point since March and will likely climb over 7.25%, or more, in the coming weeks as higher rates move through the system.

What does all of this mean for the market? I’ll get to that in a moment.

I’m a day late getting this out, so we’ll include Monday in this weekly update, which pulls down the market’s performance a bit.

The Asymmetric Portfolio also had a down day, but squeaked out the tiniest of margins over the market. I continue to buy stocks that are growing faster than the market at multiples below the market multiple, which in time should lead to outperformance.

Like it or not, interest rates are important for the economy and the market.

Lowering interest rates is like adding fuel to a fire.

But raising rates is like snuffing a fire out.

And over the last few weeks, rates have risen rapidly with no end in sight. Not only is inflation higher than the Fed would like, but drivers like the Iran war and trade wars globally also aren’t ending, so costs will keep going up.

And the Fed isn’t going to cut rates until something breaks and the economy needs stimulus. They don’t see that need now, but it may be coming.

The main place consumers are going to feel higher rates is when buying a house or a car.

Here’s a simple calculation for a $500,000 mortgage at a 6% rate. $3,539.42 in monthly payment.

Increase the rate to 7%, and the monthly cost goes up 9.3% to $3,868.18!

In other words, homes have gotten about 10% more expensive in the past six months.

Higher borrowing costs will also hit vehicles.

It takes a while for higher rates to flow through the system, but don’t expect the housing market to pick up through the end of the year, and it may get a lot worse before it gets better. And that will impact agents, home improvement stores, construction workers, and more in the ecosystem.

That trickles down to having less to spend on shoes and apparel. Or a new computer.

We’ve seen pressure on consumers, and with higher rates in the second half of this year, the consumer may be getting coal for Christmas.

Investors often treat debt as if it’s a good thing for stocks because it provides leverage.

But it also brings downside risk.

Debt has to be paid back. If the company doesn’t have the money to pay it back, they need to take out new debt.

And debt is growing, even at the biggest, most profitable companies in the world.

The story is that more debt fuels the AI buildout, but the payoff there is unclear. And if the payoff for a few trillion dollars in AI spending keeps getting pushed back, debt investors are going to start asking more questions.

And the debt being taken out is getting prohibitively expensive for companies like Coreweave $CRWV ( ▲ 4.96% ).

There better be an ROI on this buildout, or there’s trouble ahead.

But like with consumers, higher rates make it harder to justify new investments.

The next incremental data center isn’t built.

An apartment building is stalled.

The economy slows.

Rising interest rates are a big deal, and the smartest investors in the world are in debt markets, thinking about risk.

They’re telling us all something. We should listen!