10-Year Treasury Yield Long-Term Perspective: November 2025

Core Insights - The article examines the historical trends of the 10-year Treasury yield since 1962, highlighting its relationship with key economic indicators such as the Fed Funds Rate (FFR), inflation, and the S&P 500 [1] Group 1: Historical Trends of the 10-Year Treasury Yield - The 10-year Treasury yield has fluctuated significantly, peaking at 15.68% in October 1981 and reaching a low of 0.55% in August 2020, with a recent average of 4.02% at the end of November 2025 [2][4] - The stagflation crisis of the late 1970s and early 1980s led to the FFR being raised to a historic high of 20.06% in January 1981, which contributed to the peak of the 10-year yield [3] - Following the 2008 financial crisis and the 2020 pandemic, the FFR was reduced to near-zero levels, resulting in the 10-year yield dropping to its historic low [4] Group 2: Recent Policy Responses and Economic Conditions - The Fed raised the FFR from May 2022 to August 2023 to combat rising inflation, which mirrored the increase in the 10-year yield [5] - After a period of steady rates, the Fed implemented three consecutive rate cuts in September 2024, while the 10-year yield increased despite the declining FFR [6] - In 2025, the Fed maintained steady rates before executing two rate cuts, with the 10-year yield trending downwards, although inflation remained above the Fed's 2% target [7][8] Group 3: Relationship Between Treasuries and Equities - Generally, Treasuries and equities move in opposite directions, but during inflationary periods, both can rise simultaneously due to the impact of higher interest rates on corporate profits and bond prices [9] - Adjusting the S&P 500 and 10-year yields for inflation reveals the severe impact of stagflation on real equity values from the mid-1960s to 1982 [11] - The Fed's historical extremes in the FFR demonstrate its ability to implement significant policy shifts in response to economic conditions, focusing on inflation control and economic growth [13]