South-Western EconData -- Bond Yield

Bond Yield, 10 Year Treasury Bonds

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Explore further current and historical data for bond yield, 10 Year Treasury Bonds and how it relates to the real GDP, the S&P 500, and the inflation rate.

Current and Historical Data for Bond Yield, 10 Year Treasury Bonds
Review the current and historical data for 10 Year Treasury Bond yield by month at Economagic.com.

10 Year Bond Yield: Annual Change and Real GDP: Annual % Change, Both Relative to Same Period Last Year
Note that in order to make the data easily comparable on a single chart, the bond yield data are expressed in terms of the annual change. Thus if bond yield rose from 4 to 5 percent, the annual change would be 1 percentage point. As is customary, GDP is expressed as annual percent change from the previous year. We can see the powerful effect of interest rates, as reflected in the 10-year U.S. Treasury bond yield, on economic growth. When bond yields (and thus interest rates) are rising, borrowing costs for firms and consumers rises. With less borrowing there is less spending on construction and consumer durables such as automobiles, which ultimately causes the rate of growth in real GDP to decline. Likewise when bond yields are declining, borrowing costs fall, spending rises, and real GDP tends to grow. Economic circumstances in 2002 and early 2003 offer an exception to this rule. The ongoing slow recovery during that time was unusual in that it reflected the unwinding of a stock price bubble that encouraged excess corporate investment in production capacity. Excess capacity (and lack of investor confidence in reported profits) resulted in reduced business profits, which in turn help explain falling stock prices. Falling stock prices increased investor demand for bonds, which raised bond prices and reduced their yield. At the same time, due to excess production capacity, business demand for loanable funds for capital expansion was reduced, which further dampened interest rates and bond yields. Thus we had the phenomenon of falling bond yields and interest rates during weak economic times.

Economagic.com provides a more complete collection of data for the following:
10 Year Treasury Bond Yield I Real GDP

10 Yr. Bond Yield and the S&P500 Index: Annual Percent Change Relative to Same Period Last Year
Notice there is oftentimes an inverse relationship between the Treasury bond yield and stock prices. When bond yields are declining, the stock index is rising, and when bond yields are rising, the stock index is falling. Bond yields indicate trends in interest rates, and when bond yields are low, the cost of corporate borrowing also falls, which improves corporate profits and stock prices. Likewise higher bond yields can indicate falling corporate profits and stock prices. The stock market has been rebounding in the second and third quarters of 2003, evidenced by the S&P 500 posting its highest mark in over a year in July. Bond yields generally remained at or near historical lows during this time (when it comes in, third quarter 2003 data will show a sharp increase in bond yields).

Economagic.com provides a more complete collection of data for the following:
10 Year Treasury Bond Yield I S&P 500

10 Year Bond Yield: Annual Change and The CPI: Annual % Change, Both Relative to Same Period Last Year
Note that in order to make the data easily comparable on a single chart, the bond yield data are expressed in terms of the annual change. Thus if bond yield rose from 4 to 5 percent, the annual change would be 1 percentage point. As is customary, CPI is expressed as annual percent change from the previous year. Yields on Treasury Bonds are determined in part by the inflation rate (and by anticipated future inflation). Since lenders are being paid back in the future with dollars whose purchasing power has been eroded by inflation, the interest rate must compensate the lender for inflation as well as provide a real return. Thus as inflation rates rise, interest rates rise, as reflected in bond yields. We can see in the diagram that changes in the yield on 10-year U.S. Treasury bonds often tend to move in the same direction as changes in the consumer price index (CPI), though other factors (such as economic growth and the demand for loanable funds) also come in to play. During the recession that began in 2001, we saw disinflation (falling inflation rates), and growing fears of deflation (falling prices), both of which lead to falling bond yields and interest rates. Bond yields and interest rates were at the lowest levels in more than 30 years in the first two quarters of 2003. Third quarter 2003 data (when released) will show a significant rise in bond yield and interest rates due to a strengthening economy. Consumer price inflation has already increased, as indicated in the diagram.

Economagic.com provides a more complete collection of data for the following:
10 Year Treasury Bond Yield I Inflation Rate