Interest Rates and the Yield Curve
73warm
Now 2.35% | Data for Oct 2026
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
What it is
The 10-year nominal Treasury yield minus the TIPS yield: the average inflation markets expect over the next 10 years.
It shows whether markets worry about inflation coming back. Together with the real rate, it makes up the nominal Treasury yield.
The average inflation markets expect over the next 10 years.
Where it stands now
coldcoolneutralwarmhotHatched = earlier periods that were also warm
Short sample: positions start only in 2012 (less than 30 years), so conclusions should be more cautious.
When it was here before
US stocks after it began, cumulative1 yr2 yr3 yr
For each period, the changes 1, 2 and 3 years after it began are cumulative and measured from its first month; “What happened next” is measured from every warm month, so the two give different numbers. The events named beside each period are major events of that time, not necessarily related to the readings here.
What happened nextSample too small to draw conclusions (past warm months: 1; market episodes: 1).
Has hot or cold lined up with later returns?
2012–2021: average yearly change in US stocks over the next 5 years
In this period, the hotter the month, the lower the average over the next 5 years. The months overlap, so there are really only a few market episodes. This is a tendency, not a rule, and not a forecast.
What it is linked to
Expected inflationtoUS 10-yr yieldCommon explanation: Cause · same direction
10-year yield = real rate + the inflation markets expect (an identity)
This issue: Expected inflation at 73 (warm), US 10-yr yield at 91 (hot) — both above normal, in line with the common explanation.
Supported by the dataAgreement +0.59 · in step in 7 of 9 5-year periods
Values
Data and sources