CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

10-year Treasury forecast: Are rate rise expectations near peaking?

By Mensholong Lepcha

Edited by Jekaterina Drozdovica

16:35, 24 October 2022

Situation on market for US government securities. Falling chart as symbol of crisis in stock market. Concept crisis in US stock market. Falling value US government bonds. Franklin symbolizes America
Are rate rise expectations near peaking? Photo: FOTOGRIN / Shutterstock

The 10-year US treasury yields hit its highest in nearly 15 years in October 2022 on the back of an ultra-aggressive monetary tightening policy embarked by the US Federal Reserve (Fed).

With September’s inflation data surprising on the upside, the Fed is expected to maintain its restrictive stance. How are 10-year US treasury notes expected to fare as economic growth concerns grow and investors price in an imminent recession? Here we take a look at the US government bonds and 10-year treasury forecasts.

What are treasury bonds?

Treasury securities are debt obligations issued by the US Department of the Treasury on behalf of the US government. 

According to the US Securities and Exchange Commission (SEC), treasury securities are considered one of the safest investments because they are backed by the full faith and credit of the US government. There are various forms of US treasury securities:

  • Treasury bills: short-term treasuries known as T-bills which come with maturities ranging from four weeks to 52 weeks. T-bills do not pay coupons and are sold at a discount.

  • Treasury notes: long-term treasuries known as T-notes, which come with maturities of two, three, five, seven and 10 years. T-notes pay a fixed rate of interest every six months until they mature.

  • Treasury bonds: These are the longest-term treasuries known as T-bonds which come with maturities of either 20 or 30 years. T-bonds pay a fixed rate of interest every six months until they mature.

  • Treasury Inflation Protected Securities (TIPS): notes and bonds designed to protect investors against inflation by adjusting principal and interest based on changes in the Consumer Price Index (CPI). Unlike other treasury securities, the principal of TIPS is not fixed and can go up or down during its terms.

  • Floating Rate Notes (FRN): short-term investments that pay interest four times a year at an interest that may change over time. FRNs mature in two years.

Investors can choose to hold treasury securities until maturity or choose to sell them on the secondary market. The transactions in the secondary market determine the yield of these securities.

It should be noted that bond prices and bond yields have an inverse relationship, which means that when the price of a bond or a note rises the yield on it would typically decrease. When a bond or a note is in high demand, its prices will rise while its yields will fall.

Since US treasury securities are considered among the safest investments, its demand generally rises in times of economic turmoil and market crashes.

What is your sentiment on Oil - Crude?

Vote to see Traders sentiment!

Overview of 10-year treasury rate history 

The US 10-year T-notes is the most widely tracked treasury securities due to its influence on mortgage rates. The 10-year T-notes are used as a standard to which interest rates for mortgages are benchmarked.

The yield of T-notes is the current rate of return generated by the security if an investor bought it on the day. It differs from coupon rate, which is the rate of interest paid to security holders annually.

There are various factors that affect T-note yield including economic outlook, monetary policy and market sentiment. Looking at the historic 10-year treasury yields can help understand treasury yield forecast going forward.

Market yield on US Treasury securities at 10-year maturity stood at 4.1% at the start of 1962, data published by the Federal Reserve Bank of St. Louis (FRED) showed. By the end of the decade, 10-year treasury yield rose to nearly 8%. The 10-year treasury yields hit an all-time high of about 15.84% in September 1981. At the time, the US economy was suffering from high inflation and high unemployment. 

Paul Volcker was appointed as the chairman of the US Federal Reserve in August 1979 with the task of taming inflation. Volcker raised interest rates to over 20% in early 1981. By October 1982, 10-year treasury yields fell to about 10.5% as Volcker’s ultra-hawkish stance pushed inflation to fall to about 5% from over 10% a year earlier.

More recently, 10-year treasury yields have been on a downtrend since the start of the new millennium. Yields on 10-year T-notes stood at 6.68% in January 2000. 

Market yield on US 10-year treasuries

By March 2020, extreme risk-averse brought on by the Covid-19 pandemic saw money flow into treasury securities. And 10-year treasury yields fell to an all-time low of 0.52% on 9 March 2020.

In 2022, yields on 10-year T-notes rose from 1.5% at the start of the year to 4.29% by 21 October 2022, the highest since December 2007.


67,451.05 Price
-0.530% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00


19,706.30 Price
+0.970% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 1.8


3,494.82 Price
-0.200% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00


2,407.76 Price
+0.300% 1D Chg, %
Long position overnight fee -0.0198%
Short position overnight fee 0.0116%
Overnight fee time 21:00 (UTC)
Spread 0.30

What is driving 10-year treasuries? 

According to Piero Cingari, market analyst at, the Fed’s aggressive monetary policy has been the main driver behind the steep rise in US Treasury yields in 2022. Headline inflation in the US has persistently come above 8% since March 2022, which has forced the Fed to hike interest rates to a range of 3% to 3.25%, its highest since 2008. Cingari said: 

“To combat four-decade-high inflation, the Fed is raising interest rates at the fastest rate ever seen while also unwinding liquidity through quantitative tightening, or QT, in which the central bank sells its holdings of US Treasuries. With the absence of this once-forced buyer in the secondary market for US Treasuries, yields have mechanically risen.”

Economic indicators pointed to more rate hikes in the months ahead. The latest US inflation reading for September reported a larger-than-expected annual rate at 8.2%. 

What was alarming was the acceleration of annual core inflation to 6.6%, the largest 12-month increase since August 1982. Core inflation excludes volatile items such as food and energy prices.

“The data is a clear signal that the Fed has more to do,” said ING’s economic research arm THINK on 14 October. They added:

“In the wake of the Federal Open Market Committee minutes which showed that the Fed sees the costs of doing too little on inflation outweighing those of doing too much, the market has started to attribute a small chance to an even larger 100bp hike in November, and 75bp now looks like the bare minimum.”

The US Fed is scheduled to hold its penultimate monetary policy meeting on 1 November. 

When asked about how longer-term treasuries and short-term treasuries react differently to rate hikes, Cingari of explained:

“Short-term US Treasury securities are more susceptible to monetary policy changes than longer-term securities. So when the Fed is more aggressive than the market expected, short-term Treasury yields rise faster than long-term ones. Instead, the 10-year Treasury, or longer-dated ones like the 30-year bonds are more susceptible to the growth-related framework.”

10-year treasury forecast: World of uncertainties  

If growth is crucial for 10-year treasury predictions, what is the current economic outlook? 

The inversion of the yield curve, which is the spread between 10-year treasury yield and the two-year treasury yield, suggested that investors were pessimistic about economic growth and have priced in an imminent recession due to tightening monetary conditions in the US. 

The 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity spread (T10Y2Y) fell to -0.5% on 13 October 2022. The last time the T10Y2Y spread hit negative territory was in September 2000, which preceded a recession in Europe and the US a year later.

Furthermore, in his 10-year treasury forecast Cingari said that the current cycle of interest rate hikes has yet to reach its conclusion and its outlook remains uncertain. “The terminal rate is priced in by the market to be 4.9% in March 2023, but this will largely depend on the trajectory of inflation going forward,” he said.

According to Cingari, higher oil prices can “reignite the fire of long-term inflation expectations” and can push the Fed to remain hawkish for longer, adding:

“As a result, I expect interest rates to rise further from here, surpassing the 4.9% currently priced by the market by March 2023, with the 10-year Treasury yield likely to range between 4.5 and 5% by the end of the year.

“In a tightening cycle, the 10-year Treasury yield may continue to rise even if global economic conditions worsen. The yield on the 10-year note also incorporates the new interest rate and inflationary framework. 

“When there are structural changes in inflation, as we are currently experiencing, investors tend to flee bonds because the yields they provide are no longer adequate to cover the rising cost of living. As a result, bond prices fall while yields rise in order to adjust to a new reality.”

Final thoughts

The 10-year treasury notes are an important indicator of economic outlook that the market looks to when trying to gauge future market returns. It is important to note that 10-year treasury yield forecasts and inflation outlook involve many unknowns.

Therefore, readers should bear in mind that treasury rate forecasts from analysts and experts can be wrong. It is important to always conduct your own due diligence before trading.

Remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size, and goals. And never trade money that you cannot afford to lose.


What causes the 10-year treasury yield to rise?

Bond prices and bond yields have an inverse relationship, which means that when the price of a bond or a note rises, the yield on it will decrease. When a bond or a note is in high demand, its prices will rise while its yields will fall.

Why do bond yields rise with inflation?

US 10-year treasury yields have risen in 2022 amid high inflation due to an ongoing monetary tightening cycle.

Are rising bond yields good or bad?

Yield is the current rate of return generated by the bond. Higher yields means more returns, but it may also indicate greater risk. Junk bonds tend to have higher yields than safer-graded bonds.

Are 10 year treasury bonds a good investment?

According to the US SEC, treasury securities are considered one of the safest investments because they are backed by the full faith and credit of the US government.

Markets in this article

Oil - Crude
Crude Oil
78.361 USD
-0.345 -0.440%

Related topics

Rate this article

Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 630,000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading