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About the 10-Year Treasury Yield

The 10-year Treasury yield is the most important number in the U.S. bond market and arguably the most important interest rate in the world. It represents the annualized return investors earn for lending money to the U.S. government for a decade. Because U.S. Treasuries are considered essentially risk-free (the federal government can always print dollars to pay them back), this yield serves as the benchmark "risk-free rate" that prices nearly every other financial asset on Earth.

Why the 10-year matters more than the Fed funds rate for most things

When journalists talk about "what the Fed is doing to interest rates," they mean the overnight fed funds rate. But the 10-year yield is what actually shapes consumer and corporate borrowing costs. 30-year mortgages are priced at the 10-year plus a ~170 bps spread. Corporate bond yields are quoted as 10-year plus a credit spread. Stock valuations use the 10-year as the discount rate for future cash flows — when the 10-year rises, stocks usually fall, all else equal. Auto loans, student loans, and credit cards ultimately reference longer-term yields too.

Reading this chart

The all-time high — 15.84% in September 1981 — coincided with the Volcker Fed's inflation war. The all-time low — 0.52% in August 2020 — was the depths of pandemic safety-flight. The 2022–23 climb from below 1% back to almost 5% in just 18 months was one of the fastest yield surges in postwar history. Today's 4.42% sits near the long-term postwar average. Many veteran investors view 4–5% as the historical "normal" — the 2010s' near-zero yields were the anomaly, not the rule.