Global anchor · Money · Interest Rates and the Yield Curve
91hotat an extreme
2.09 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 interest rate the US government pays to borrow for 10 years.
The benchmark for pricing assets worldwide: mortgages, corporate bonds and stock valuations are all measured against it.
Where it stands now
coldcoolneutralwarmhotHatched = earlier periods that were also hot
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 next
Bars: median cumulative changeEarlier months with US 10-yr yield hot, excluding the current period (62)All months (644)
Median of the deepest drop below the starting month within the next 5 years: −5.5% for months with US 10-yr yield hot; −4.5% for all months.
The hot months come from a small number of market episodes (3), and neighboring months are not independent events; rises and falls are all listed. This is the historical record, not a forecast. “US stocks” means the S&P 500 price index compiled by Professor Shiller (monthly average, excluding dividends).
| Median position | Back to neutral (40–60) | Still hot or more extreme | |
|---|---|---|---|
| 1 yr later | 88hot | 13% | 60% |
| 3 yr later | 52neutral | 16% | 21% |
| 5 yr later | 7cold | 6% | 19% |
Has hot or cold lined up with later returns?
1973–2021: 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
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
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
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
US 10-yr yieldtoUS valuationCommon explanation: Cause · opposite direction
Higher rates make future profits worth less today, weighing on valuations
This issue: US 10-yr yield at 91 (hot), US valuation at 99 (hot) — both above normal, not in line with the common explanation (this is an inverse link).
Weak or inconsistentAgreement +0.37 · in step in 24 of 49 5-year periods
US 10-yr yieldtoHouse prices, 8 economiesCommon explanation: Cause · opposite direction
Rising mortgage rates weigh on house prices
One of the two has no data yet for this issue.
Not visible in our dataAgreement +0.01 · in step in 1 of 8 5-year periods
US 10-yr yieldtoUS dollarCommon explanation: Cause · same direction
When US rates are relatively high, money flows into dollar assets
This issue: US 10-yr yield at 91 (hot), US dollar at 45 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Our data show the oppositeAgreement −0.64 · in step in 3 of 8 5-year periods
Values
Data and sources