October 2023 - US Treasury Yields: Reaching Peak? Historical Trends

Rate-hike Cycles Reviewing From 1983 to 2023

Reviewing the seven rate-hike cycles from 1983 to 2023, data shows that in most cases (except for the period from March 1988 to June 1989), the peak of $U.S. 10-Year Treasury Notes Yield(US10Y.BD)$ is higher than the Federal funds rate at the time of the last rate hike. The $U.S. 10-Year Treasury Notes Yield(US10Y.BD)$ typically peaks 1 to 3 months ahead of the final rate hike.

Economy Reviewing

Looking at the economic data, there were two rate-hike cycles where the economic growth showed a counter-trend upward movement: from Mar 1983 to Aug 1984 and from Mar 2022 to the present. Moreover, the current cycle is the only one where there has been a significant decrease in inflation and a slight increase in the unemployment rate.

While four out of the seven cycles experienced an inverted yield curve, the current cycle is relatively unique in terms of both the duration and extent of the inversion when compared to historical data.

Source: U.S. Bureau of Labor Statistics, Fred

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Author

Moomoo Official

24 Oct 2023