Interest Rates and the Yield Curve
100hotat an extreme
2.43 percentage points above its 10-year average | Data for Sep 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 yield on 10-year German government bonds, the euro area’s benchmark rate.
It reflects ECB policy and the European economy, and often moves with US Treasury yields.
Where it stands now
coldcoolneutralwarmhotHatched = earlier periods that were also hot
Short sample: positions start only in 2009 (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 hot 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 hot months: 2; market episodes: 1).
Has hot or cold lined up with later returns?
2009–2021: average yearly change in US stocks over the next 5 years
There is no clear relationship between hot or cold and what came next. The gaps between the bars are not consistent across months (rank correlation below 0.25); this is a record of the past, not a forecast.
What it is linked to
US 10-yr yieldtoGerman 10-yr yieldCommon explanation: Ripple · same direction
Global investors compare government bonds across countries, so rising US yields pull others along
This issue: US 10-yr yield at 91 (hot), German 10-yr yield at 100 (hot) — both above normal, in line with the common explanation.
Supported by the dataAgreement +0.85 · in step in 12 of 12 5-year periods
Policy ratestoGerman 10-yr yieldCommon explanation: Cause · same direction
Policy rates set the short end and pull long-term rates along (ECB → German bonds)
This issue: Policy rates at 85 (hot), German 10-yr yield at 100 (hot) — both above normal, in line with the common explanation.
Weak or inconsistentAgreement +0.40 · in step in 6 of 12 5-year periods
German 10-yr yieldtoEUR/USDCommon explanation: Cause · euro strengthens
When European rates rise relative to US rates, money flows into the euro
This issue: German 10-yr yield at 100 (hot), EUR/USD at 73 (warm) — both above normal, in line with the common explanation.
Weak or inconsistentAgreement +0.35 · in step in 0 of 3 5-year periods
Over the whole history the direction matches the common explanation but is weak, and in most periods the direction did not match, so the link counts as unstable.
Values
Data and sources