Core Insights - The article analyzes 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] - It discusses the contrasting monetary policies during periods of high inflation and economic recovery, particularly the drastic measures taken by the Federal Reserve in the early 1980s and the ultra-low interest rates following the 2008 financial crisis and the 2020 pandemic [1] Group 1: Historical Trends - The 10-year Treasury yield peaked at 15.68% in October 1981 and reached a historic low of 0.55% in August 2020, reflecting significant economic events [1] - The FFR was raised to a historic high of 20.06% in January 1981 to combat inflation, leading to a peak in the 10-year yield shortly thereafter [1] - Following the 2008 financial crisis, the FFR was lowered to approximately 0.04% in May 2020, resulting in a corresponding drop in the 10-year yield [1] Group 2: Recent Developments - From May 2022 to August 2023, the Fed raised the FFR to its highest level in over 20 years, which was mirrored by a rise in the 10-year yield [1] - The Fed held rates steady for over a year as inflation cooled, but shifted to three consecutive rate cuts in September 2024, while the 10-year yield increased despite declining FFR [1] - By the end of December 2025, the 10-year yield was at 4.24% with inflation at 2.68%, indicating persistent inflationary pressures [1] Group 3: Treasuries vs. Equities - Generally, Treasuries and equities move in opposite directions, but during inflationary periods, both can rise due to the impact of higher interest rates on corporate profits [1] - 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 [1] - The Fed's historical extremes in the FFR demonstrate its ability to implement significant policy shifts in response to economic conditions, with varying success in stimulating the economy [1]

Group 1 - The 10-year Treasury yield was trading at 4% after reaching a low of 3.976% earlier, marking a significant drop from 4.8% earlier in the year [2] - Bill Gross, known as the Bond King, asserts that the 10-year Treasury yield should not be below 4%, indicating a belief in higher yields reflecting economic conditions [1][2] - Factors influencing Treasury yields include the amount of government debt, inflation expectations, economic growth, and interest rates [2]