10-Year Treasury Yield Above 4%
Higher-for-longer rate regime
The 10Y Treasury yield above 4% represents a return to pre-GFC rate levels. From 2009-2021, 10Y yields averaged approximately 2.2%. The return to 4%+ changes the relative attractiveness of stocks vs. bonds and impacts equity valuations through the discount rate.
| Date | 1M return | 1Y return | 5Y return |
|---|---|---|---|
| 1962-01-02 | -3.0% | -11.7% | +13.3% |
| 1963-04-15 | +1.6% | +15.9% | +40.1% |
| 2002-09-06 | -12.2% | +15.4% | +62.4% |
| 2003-10-02 | +3.0% | +11.3% | +7.7% |
| 2004-10-26 | +6.4% | +7.7% | -4.3% |
| 2007-11-23 | +3.9% | -44.5% | -2.4% |
| 2010-04-05 | -1.2% | +12.2% | +74.9% |
| 2022-10-17 | +8.5% | +17.3% | — |
| 2024-01-05 | +5.5% | +25.8% | — |
| 2025-10-17 | +0.1% | — | — |
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
At 4%+ yields, a 60/40 portfolio generates meaningful income from the bond allocation for the first time since 2007. This is structurally positive for balanced portfolios.
Higher rates compress the P/E multiple investors are willing to pay. The S&P 500 has historically averaged a 16x P/E when the 10Y is between 4-5%, vs. 21x when yields are below 3%.
In low-rate regimes (2010-2021), stocks and bonds moved opposite (bonds hedged stocks). In higher-rate regimes (2022+), both fall together during sell-offs, reducing diversification benefit.
With bonds paying meaningful income again, revisit allocation decisions made when yields were near 2% — the case for stretching into riskier assets for yield is weaker now. Review what actually diversifies your equities, too: in higher-rate regimes stocks and bonds have tended to fall together, so cash and inflation-protected bonds may need to carry more of the hedging load.