This comprehensive report examines the 10-year Treasury yield's evolution since 1962, providing a detailed understanding of its historical behavior in relation to critical economic factors such as the Federal Funds Rate (FFR), inflation, and the S&P 500 equity index. By charting these trends over decades, the analysis illuminates the intricate dynamics that have shaped bond markets and the broader financial landscape.
Specifically, the study highlights the period around December 2025, when the weekly average of the 10-year Treasury yield stood at 4.16%. During 2025, the Federal Reserve maintained a stable interest rate policy for the initial six months, followed by three successive rate reductions towards the end of the year. Despite these efforts to adjust monetary policy, inflationary pressures persisted throughout most of the year, consistently exceeding the Fed's target rate of 2%. This scenario suggests a complex environment where central bank actions faced challenges in curbing rising prices, influencing both bond yields and equity market performance.
Ultimately, this examination provides valuable insights into how various economic forces converge to impact financial markets, demonstrating the resilience of equities even amidst elevated rates and inflation, albeit with implications for real returns. Understanding these historical correlations is crucial for interpreting current market conditions and anticipating future economic shifts. The interconnectedness of these financial indicators underscores the continuous dance between monetary policy and market realities.