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

Core Viewpoint - 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, inflation, and the S&P 500. Group 1: Historical Trends - The 10-year Treasury yield peaked at 15.68% in October 1981 during the Volcker era and reached a historic low of 0.55% in August 2020 amid pandemic-related economic uncertainty [2][3] - The Federal Funds Rate (FFR) was raised to a historic high of 20.06% in January 1981 to combat inflation, leading to the peak in the 10-year yield [3] - Following the 2008 financial crisis, the FFR was lowered to approximately 0.04% in May 2020, resulting in the 10-year yield dropping to 0.55% [4] Group 2: Recent Developments - From May 2022 to August 2023, the Fed raised the FFR to its highest level in over 20 years, causing the 10-year yield to rise in tandem [5] - In September 2024, the Fed implemented three consecutive rate cuts, while the 10-year yield moved in the opposite direction, indicating persistent inflation [6] - By the end of December 2025, the 10-year yield averaged 4.16%, with inflation at 2.74%, and the Fed cut the FFR by 25 basis points to a range of 3.50-3.75% [8] Group 3: Market Dynamics - The S&P 500 and the 10-year yield generally 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]