Rates & Fed Watch: 10-year at 5.3%, curve +0.5 (week of October 5)
The 10-year Treasury yield is 5.3% (+45 basis points over a month) and the 2-year 4.8%, so the curve is positive by 0.5 points. The Fed funds rate is 3.9%; two-year yields above it suggest markets expect rates to stay higher or rise. Credit spreads and volatility are in the table below, with the week's, month's and year's change for each.
12 months: Treasury yields and the Fed funds rate
Long yields reflect growth and inflation expectations over a decade; the 2-year tracks where the Fed is expected to go.
Rates, credit and volatility
Measure
Latest
1 week
1 month
12 months
10-year Treasury
5.3%
+0.0
+0.5
+1.1
2-year Treasury
4.8%
-0.1
+0.3
+1.2
10y minus 2y
0.5 pts
+0.0
+0.1
-0.1
Fed funds rate
3.9%
+0.0
+0.3
-0.2
10-year breakeven inflation
2.4%
-0.0
-0.0
+0.0
High-yield credit spread
3.1 pts
-0.0
+0.4
+0.1
VIX (volatility)
15.1
-0.2
-1.4
-1.3
Yields and rates in percent; changes in percentage points (0.1 = 10 basis points).
What this means
A positive curve (10-year above 2-year) is the normal shape: lenders get paid more for lending longer.
Higher long-term yields make future profits worth less today, which tends to weigh most on expensive, long-duration growth stocks; falling yields tend to help them.
High-yield spreads are tight: lenders see little default risk, a supportive backdrop for stocks.
How is the model positioned for rates?
Subscribers see the model's market-risk reading and how the model portfolio is positioned for it.
Data from the Federal Reserve Bank of St. Louis (FRED). Research only, not investment advice or a recommendation to buy or sell any security. Rankings change as data changes and can be wrong. Torvanta and its founder may hold positions in securities discussed. Past performance does not guarantee future results.