A year of higher Treasury yields, and why most of it is real yield

The 10-year yield is about one percentage point higher than a year ago. Nearly all of that rise came from real yields, not from higher inflation expectations. By PYE Markets (@pyemarkets).

US Treasury yields have moved a long way in twelve months. On 15 October 2026 the 10-year constant-maturity yield stood at 5.10%, against 4.05% a year earlier, a rise of 105 basis points. The 2-year yield rose even more, from 3.50% to 4.77% (+127 bp).

All figures here come from the Federal Reserve's data via FRED and are shown, with their dates, on our rates tracker.

Where the curve stands

On 15 October 2026, compared with a month and a year earlier:

- 3-month: 4.28%, against 4.11% a month earlier and 4.03% a year earlier - 2-year: 4.77%, against 4.67% and 3.50% - 10-year: 5.10%, against 5.00% and 4.05% - 30-year: 5.43%, against 5.36% and 4.64%

The gap between the 10-year yield and the 3-month yield has opened up. A year ago the two were almost level: FRED's 10-year minus 3-month spread was −0.03 percentage points on 16 October 2025 (on the 15 October figures above, the gap was +0.02). On 16 October 2026 the spread was +0.83 percentage points, so long-term yields now sit clearly above short-term ones.

Most of the rise is real yield

A nominal Treasury yield can be split, roughly, into two parts: the real yield (what inflation-protected Treasuries pay) and breakeven inflation (the inflation rate the market is pricing in).

- The 10-year real yield rose from 1.76% to 2.78% between 15 October 2025 and 15 October 2026 (+102 bp). - 10-year breakeven inflation moved from 2.28% to 2.35% between 16 October 2025 and 16 October 2026 (+7 bp).

So almost the whole one-point rise in the 10-year yield came from higher real yields. Markets are not mainly pricing more inflation. They are demanding a higher return after inflation for lending to the US government for ten years.

Why traders care

- Stocks and valuations: future profits are discounted at higher rates, which weighs most on companies whose value sits far in the future. - Gold: gold pays no income, so higher real yields raise the cost of holding it. Our lesson on bonds and rates explains the mechanics. - The dollar and currencies: rate differences between countries move exchange rates. Our central bank tracker shows where each major policy rate stands.

What to watch

The Federal Reserve's next decision is on 28 October (statement at 2:00 PM ET). The effective federal funds rate was 3.88% on 16 October, within the Fed's 3.75–4.00% target range after the 25 bp increase that took effect on 17 September.

General market information, not investment advice. Figures from FRED for 15–16 October 2026 (dates given for each); the rates tracker updates every two hours.

Corrected 20 October 2026: an earlier version said the yield curve had been inverted a year ago and gave mixed dates for some figures. The 10-year/3-month spread was about zero then, not clearly inverted, and each figure now carries its own date. Corrections log.