Yield on 10-year Treasury note

The yield on the 10-year Treasury note has continued to rise in 2025 despite the Federal Reserve's ongoing rate reductions. The yield is estimated to reach 4.2% during 2025, following sustained increases observed in recent years. This is occurring even as the Fed has moved to reduce rates in response to changing economic conditions, indicating persistent upward pressure on yields. The continued yield increase reflects ongoing investor demand for stable, long-term returns amid shifting macroeconomic factors, including evolving inflation expectations and global economic uncertainty.

From 2020 to 2025, the yield on the 10-year Treasury note displays significant volatility and rapid increases, principally driven by adjustments in monetary policy and fluctuating investor sentiment. In 2021, the yield rose to 1.4% as economic conditions improved and inflation expectations increased following the initial pandemic period. In 2022, in response to surging inflation, the Federal Open Market Committee (FOMC) adopted a broadly aggressive monetary tightening approach, raising rates during every meeting of the year. This was further reinforced by the Fed's transition to selling government bonds, which increased supply and contributed to further rises in yield. This monetary policy environment led to the yield on the 10-year Treasury note climbing by 1.6% in 2022, and an additional increase by 1.0% in 2023, reflecting investor adjustments to inflation and interest rate movements.

Despite the initiation of rate cuts beginning in the third quarter of 2024, yields continued to grow, underscoring the complexity of factors influencing long-term government debt markets. Through these five years, macro trends such as persistent inflation, evolving monetary stances, and heightened geopolitical and financial market uncertainty have been key forces shaping yield dynamics. The interplay between the Federal Reserve's policy actions, investor risk aversion, and broader economic indicators has resulted in heightened volatility and elevated yields.

The cumulative impact over 2020 to 2025 has been a notable rise in the 10-year Treasury yield. Key macroeconomic themes included moving from pandemic-driven economic disruptions to aggressive inflation management via monetary tightening, followed by renewed policy easing. These factors are crucial as they drive overall borrowing costs throughout the economy and impact both private and public investment decisions.