Fed Funds Rate and 10-Year U.S. Treasury Yield The S&P 500’s record-breaking rally shows no signs of cooling, with market participants now positioning for another Fed rate cut on October 29 to fuel the next leg higher. Image: Goldman Sachs Global Investment Research
Survey – 10-Year U.S. Treasury Yields While expectations tilt toward falling 10-year U.S. Treasury yields, plenty of voices argue for a rise, citing everything from sticky inflation to uncertain rate cuts and uneven economic growth. Image: Deutsche Bank
U.S. 2-Year Treasury Yield vs. Fed Funds The current 2-year U.S. Treasury yield, which is below the fed funds rate, signals that monetary policy is restrictive. It also implies the Fed is about 80 basis points behind the curve in cutting rates. Image: Real Investment Advice
Average U.S. 10-Year Treasury Yield Performance in Fed Rate Cut Cycles Fed rate cuts usually push down short-term interest rates, but long-term U.S. Treasury yields do not always move in parallel. Market expectations around inflation, future Fed decisions, and debt supply dynamics can drive them higher instead. Image: Deutsche Bank
Average and Median Monthly 10-Year U.S. Treasury Yield Change Since 2000 U.S. Treasury bond yields typically increase in September and October due to a surge in bond supply after the summer lull, combined with market influences like policy shifts and investor repositioning. Image: Deutsche Bank
10-Year U.S. Treasury Yields with Various Moving Averages When the Fed prioritizes the labor market over inflation, it can reduce the immediate risk of recession by sustaining employment. However, this is likely to increase inflation expectations and push yields higher. Image: J.P. Morgan
S&P 500 Dividend Yields vs. 10-Year Treasury Yields S&P 500 dividend yields are near historic lows, close to levels seen during the 2000 tech bubble, due to high valuations and companies favoring stock buybacks over dividends, challenging income-focused investors relying on dividends. Image: Deutsche Bank
S&P 500 Earnings Yield Minus U.S. 10-Year Treasury Yield The recent rally has made U.S. equities relatively expensive compared to bonds. Historically, when the risk premium has been at current levels, the S&P 500 has delivered an average 12-month return of only 2.5% over the past three decades. Image: Bloomberg
U.S. 10-Year Treasury Yield and Economic Surprise Index Weakening U.S. economic data and evolving fiscal conditions have led Goldman Sachs to revise down Treasury yield forecasts, anticipating a more accommodative monetary policy with earlier and multiple Fed rate cuts in 2025. Image: Bloomberg
10-Year U.S. Treasury Yield vs. Bloomberg Dollar Spot Index The dollar’s decline amid rising Treasury yields signals concerns over U.S. fiscal health, reduced foreign demand for debt, and geopolitical risks, reflecting a shift in investor confidence and the dollar’s role as a global safe haven. Image: Bloomberg
10-Year U.S. Treasury Yield Fair Value The fair value model for the 10-year U.S. Treasury yield, based on market variables, suggests a fair value close to 3.9%. Image: Deutsche Bank