Interest Rates and the Yield Curve
100hotat an extreme
Now 2.89% | 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 yield on Treasury Inflation-Protected Securities (TIPS): the interest rate after expected inflation.
The higher the real rate, the higher the opportunity cost of holding assets that earn no interest, such as gold. It also weighs on the valuations of fast-growing companies.
Where it stands now
coldcoolneutralwarmhotHatched = earlier periods that were also hot
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 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: 0; market episodes: 0).
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
Real ratetoUS 10-yr yieldCommon explanation: Cause · same direction
10-year yield = real rate + inflation expectations (an identity)
This issue: Real rate at 100 (hot), US 10-yr yield at 91 (hot) — both above normal, in line with the common explanation.
Supported by the dataAgreement +0.91 · in step in 9 of 9 5-year periods
Real ratetoGoldCommon explanation: Cause · opposite direction
Gold pays no interest, so the higher the real rate, the higher the opportunity cost of holding gold
This issue: Real rate at 100 (hot), Gold at 84 (hot) — both above normal, not in line with the common explanation (this is an inverse link).
Our data show the oppositeAgreement −0.44 · in step in 7 of 9 5-year periods
In most periods the two moved the way the common explanation says, but over the whole history the direction is the opposite: the relationship may have flipped in some eras.
Values
Data and sources