Explore further current and historical data for bond yield, 10 Year Treasury Bonds and how it relates to the real GDP, the S&P 500, and the inflation rate.
Current and Historical Data for Bond Yield, 10 Year Treasury Bonds
Review the current and historical data for 10 Year Treasury Bond yield by month at Economagic.com.
10 Year Bond Yield: Annual Change and Real GDP: Annual % Change, Both Relative to Same Period Last Year
Note that in order to make the data easily comparable on a single chart, the bond yield data are expressed in terms of the annual change. Thus if bond yield rose from 4 to 5 percent, the annual change would be 1 percentage point. As is customary, GDP is expressed as annual percent change from the previous year. Long-term bond yields are largely driven by investors' expectations regarding future inflation rates, and these expectations are in turn influenced by trends in economic growth rates. Recessions tend to reduce inflationary expectations, which in turn lead to lower bond yields. Lower bond yields reduce the cost of borrowing, which creates an economic stimulus and encourages economic growth. Strong economic growth rates can raise inflationary expectations, which can increase bond yields. The U.S.'s growing trade deficit with China and other major exporting countries has distorted this relationship between economic growth rates and bond yields. This growing trade deficit results in China holding a large quantity of U.S. dollars. Were these exporting countries to sell these dollars in the international currency market, the value of the dollar would fall, which would make their imports more expensive. Since these exporting countries want to maintain a strong U.S. export market, they use these dollars to buy U.S. Treasury bonds, which maintains a stronger dollar but keeps Treasury bond yields lower than they would otherwise be. The effects of these low yields and interest rates on the U.S. economy are manifested in strong real estate markets, construction activity, and consumer spending derived from home equity loans.
10 Yr. Bond Yield and the S&P500 Index: Annual Percent Change Relative to Same Period Last Year
Notice there is oftentimes an inverse relationship between the Treasury bond yield and stock prices. When bond yields are declining, the stock index is rising, and when bond yields are rising, the stock index is falling. Bond yields indicate trends in interest rates, and when bond yields are low, the cost of corporate borrowing also falls, which improves corporate profits and stock prices. Likewise higher bond yields can indicate falling corporate profits and stock prices. Nevertheless the relationship between stock prices and bond yields is complex, since in times of economic recovery the economy can experience higher bond yields due to increasing demand for credit, while at the same time the S&P 500 and equity markets respond to improving corporate profits and better prospects for the future.
10 Year Bond Yield: Annual Change and The CPI: Annual % Change, Both Relative to Same Period Last Year
Note that in order to make the data easily comparable on a single chart, the bond yield data are expressed in terms of the annual change. Thus if bond yield rose from 4 to 5 percent, the annual change would be 1 percentage point. As is customary, CPI is expressed as annual percent change from the previous year. Yields on Treasury Bonds are determined in part by anticipated future inflation. Since lenders are being paid back in the future with dollars whose purchasing power has been eroded by inflation, the interest rate must compensate the lender for inflation as well as provide a real return. Thus inflation rates are anticipated to rise in the future, interest rates will increase in the current period, as inflation rates rise, interest rates rise, as reflected in bond yields. We can see in the diagram that changes in the yield on 10-year U.S. Treasury bonds often tend to move in the same direction as changes in the consumer price index (CPI), though in recent years factors such as our growing trade deficit has distorted the relationship between long-term bond yields and anticipated future inflation. Recently there has been some upward pressure on the CPI, which has encouraged the Fed to steadily raise short-term interest rates to slow down the economy. It is interesting to note that longer-term interest rates, such as the 10 year bond yield, have not increased with short-term interest rates. Perhaps investors believe that the Fed has succeeded in taming future inflationary pressures. See the most current entry on the perspectives page to see what the Fed has to say about this.