| Date | 3-mth | 6-mth | 1-yr | 2-yr | 5-yr | 10-yr | 30-yr | AaaAaa represents the highest rung of investment-grade corporate debt, indicating top-level creditworthiness and the lowest default risk. More | BaaBaa represent the lowest rung of investment-grade corporate debt with moderate credit risk, making them susceptible to higher default risk than Aaa bonds. More | HY-OAS | 5Y5Y5Y5Y forward rate provides a market-implied view of where policy ultimately settles once cyclical forces dissipate. Importantly, it captures the destination of policy rather than its near-term trajectory, and should be interpreted as a structural anchor rather than a tactical signal. More Forward | 5Y Breakeven Inflation |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 4/24/2026 | 3.69 | 3.71 | 3.67 | 3.78 | 3.92 | 4.31 | 4.91 | 5.41 | 6.01 | 2.86 | 2.23 | 2.61 |
| 4/17/2026 | 3.70 | 3.69 | 3.64 | 3.71 | 3.84 | 4.26 | 4.88 | 5.36 | 5.98 | 2.83 | 2.16 | 2.56 |
| 4/10/2026 | 3.69 | 3.72 | 3.70 | 3.81 | 3.94 | 4.31 | 4.91 | 5.42 | 6.03 | 2.94 | 2.14 | 2.58 |
| 4/3/2026 | 3.71 | 3.73 | 3.72 | 3.84 | 3.99 | 4.35 | 4.91 | 5.44 | 6.05 | 3.13 | 2.11 | 2.61 |
| 3/27/2026 | 3.73 | 3.75 | 3.77 | 3.88 | 4.06 | 4.44 | 4.98 | 5.66 | 6.22 | 3.42 | 2.06 | 2.56 |
| 3/20/2026 | 3.74 | 3.79 | 3.80 | 3.88 | 4.01 | 4.39 | 4.96 | 5.61 | 6.18 | 3.24 | 2.13 | 2.63 |
| 3/13/2026 | 3.72 | 3.70 | 3.66 | 3.73 | 3.87 | 4.28 | 4.90 | 5.60 | 6.11 | 3.28 | 2.11 | 2.61 |
| 3/6/2026 | 3.71 | 3.68 | 3.56 | 3.53 | 3.67 | 4.10 | 4.73 | 5.32 | 5.86 | 3.13 | 2.14 | 2.56 |
| 2/27/2026 | 3.68 | 3.61 | 3.48 | 3.42 | 3.58 | 4.02 | 4.64 | 5.25 | 5.77 | 3.10 | 2.1 | 2.40 |
| 2/20/2026 | 3.69 | 3.60 | 3.51 | 3.46 | 3.65 | 4.08 | 4.72 | 5.25 | 5.76 | 2.86 | 2.13 | 2.43 |
| 2/13/2026 | 3.68 | 3.59 | 3.42 | 3.40 | 3.61 | 4.04 | 4.69 | 5.31 | 5.81 | 2.95 | 2.12 | 2.42 |
| 2/6/2026 | 3.68 | 3.59 | 3.45 | 3.54 | 3.80 | 4.26 | 4.85 | 5.40 | 5.90 | 2.87 | 2.18 | 2.50 |
| 1/30/2026 | 3.67 | 3.61 | 3.48 | 3.54 | 3.81 | 4.24 | 4.87 | 5.35 | 5.86 | 2.80 | 2.19 | 2.53 |
Source: Federal Reserve Economic Data (FRED) is an online database created and maintained by the Research Department at the Federal Reserve Bank of St. Louis
This week’s data reflects a continuing normalization trend, but with a slight bias toward bear flatteningA bear flattener is a yield curve shift where short-term interest rates rise faster than long-term rates and often signals potential economic contraction or slower growth ahead. More. Yields on the long end rose slightly, while the belly and short end remained relatively stable, indicating some caution in the market as inflation expectations and growth concerns linger.
Yield Curve Dynamics
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YC Flattening (Mild Bearish Bias):
The curve remains upward-sloping, but the bear flatteningA bear flattener is a yield curve shift where short-term interest rates rise faster than long-term rates and often signals potential economic contraction or slower growth ahead. More trend is becoming more apparent, with longer-term yields edging higher. This suggests that markets are reassessing inflation risks and the possibility of a more extended period of elevated rates. -
Long-End Pressure:
The 10-year (↑ to 4.31%) and 30-year (↑ to 4.91%) yields rose slightly. This uptick suggests that structural inflationary pressures and ongoing supply concerns are still weighing on the long end of the curve, with investors demanding higher compensation for holding longer-duration bonds. -
Short-End Stability:
The front end (3-month at 3.69%, 1-year at 3.67%) remains stable, indicating the market expects the Fed to remain on hold for the time being, with no strong signal of either a rate cut or hike in the near term. -
“Fed Policy Expectations” (2yr – 3mo):
The spread remains tight at around +9bp, signaling that markets are still in a wait-and-see mode, with no major shift in expectations for Fed policy, but still factoring in the possibility of a pause or small adjustments. -
10y–3m Spread (+62bp):
The positive spread remains intact, indicating that recession fears are still muted. However, the flattening of this spread suggests that markets are becoming more cautious about growth expectations. -
30y–2y Spread (+113bp):
The long-term spread has narrowed slightly, signaling a decrease in urgency for higher long-term rates. This could indicate that the market is recalibrating its expectations for long-term growth and inflation.
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Credit Risk & Spreads
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AaaAaa represents the highest rung of investment-grade corporate debt, indicating top-level creditworthiness and the lowest default risk. More:
Yields remained steady at 5.41%, with the spread over the 30-year Treasury (+50bp) signaling continued demand for high-quality durationBond Duration: Estimates the percentage change in a bond’s price for every 1% shift in interest rates. For example, a bond with a 3-year duration will gain or lose roughly ±3% of its value if rates fall or rise by 1%. More. Investors are still looking for safety, but with a slightly more cautious outlook. -
BaaBaa represent the lowest rung of investment-grade corporate debt with moderate credit risk, making them susceptible to higher default risk than Aaa bonds. More:
The spread to the 10-year Treasury widened slightly to +173bp, while the Aaa–BaaBaa represent the lowest rung of investment-grade corporate debt with moderate credit risk, making them susceptible to higher default risk than Aaa bonds. More spread remains tight at +60bp. The stability in investment-grade spreads suggests credit conditions remain favorable, but the market is closely watching for any signs of widening. -
High-Yield OAS:
The HY-OAS widened slightly to +286bp, indicating modest concerns about credit risk, but still well below the peaks seen during periods of heightened stress. The market remains relatively comfortable with risk, though a small uptick suggests a slight increase in caution.
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MOVE Index
The ICE BofA U.S. Bond Market Option Volatility Estimate (MOVE) Index measures implied volatility of U.S. Treasury yields, derived from options on Treasuries (primarily 2Y–30Y maturities). It’s commonly called the “VIX for bonds”, but more precisely, it reflects the market’s expectation of how much Treasury yields will move, not bond prices. It is a critical cross-asset signal.
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- Current reading: 66.97 bp.
- Leading Indicator: Rate volatility often transmits into equity volatility because discount ratesThe interest rate used to determine what a future sum of money is worth today. It accounts for the "time value of money"—the principle that a dollar today is worth more than a dollar tomorrow—and the risk that a future payment might not actually be received. More underpin asset valuations.
- Trend: Stabilizing after the ease from prior elevated levels.
- Interpretation: The sustained compression in rate volatility reinforces a “calmer markets” regime. Lower volatility in yields reduces uncertainty around discount ratesThe interest rate used to determine what a future sum of money is worth today. It accounts for the "time value of money"—the principle that a dollar today is worth more than a dollar tomorrow—and the risk that a future payment might not actually be received. More, which typically supports both equities and credit.
- Expected 10yr ranges (by timeframe):
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| Timeframe | Low (%) | High (%) |
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| 1 week | 4.22 | 4.40 |
| 1 month | 4.12 | 4.50 |
| 1 year | 3.64 | 4.98 |
Impact on Equities
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- Equity Valuation Pressure: The 10-year yield at 4.31% remains near the critical 4.00%–4.50% range, continuing to act as a constraint on equity valuations, especially for growth stocks. Higher rates decrease the present value of future earnings, and the recent uptick in yields may add additional pressure to equity multiples.
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Most Discounted-Cash-Flow (DCF) models use the 10-yr as the “risk-free” rate. So, as the discount rateThe interest rate used to determine what a future sum of money is worth today. It accounts for the "time value of money"—the principle that a dollar today is worth more than a dollar tomorrow—and the risk that a future payment might not actually be received. More rises, the present value (PV) of future cash flows declines.
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- Normal Equity Risk Premium (ERP): the extra return investors expect for choosing stocks over “safe” Treasuries is currently very compressed. While earnings yields provide a baseline for expected returns, the sustainability of those returns depends heavily on the composition of nominal growth. With real growth subdued and inflation doing most of the work, the quality of earnings expansion becomes a key risk for equity valuations.
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The “quality” of the 2025 Nominal GDP is low, as the latest release of Real GDP (BEA) is only 0.48%, while inflation (GDP Price Deflator) is around 3.74%. This puts Nominal GDP (2025) at 4.24%. In other words, ~88.2% of the increase in the dollar value of the economy (Nominal GDP) in 2025 was due to higher prices. If this trend continues, then the threat of stagflationAn economic anomaly characterized by the simultaneous occurrence of stagnant growth and high unemployment alongside persistent, rising inflationary pressure. More rises.
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- Competitive Yields:
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- Treasuries: ~3.69%–4.91%
- Investment-grade credit: ~5.41%–6.01%
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- Competitive Yields:
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Given these levels, equities may look expensive, especially to income-focused investors seeking higher yields from safer assets.
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- Risk Appetite:
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Despite the uptick in HY-OAS, risk appetite remains largely positive, with investors willing to take on credit risk for higher returns. However, the slight widening of spreads suggests a growing awareness of credit risk.
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- MOVE Index Influence:
The stable MOVE index suggests that rate volatility is still relatively low, which is generally supportive for equities. However, the underlying risks of weak growth and persistent inflation could create volatility once the market begins to reassess future conditions.
- MOVE Index Influence:
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- Growth vs. Inflation Narrative:
The continued pressure in long-term yields and the uptick in the 5Y5Y Forward rate5Y5Y forward rate provides a market-implied view of where policy ultimately settles once cyclical forces dissipate. Importantly, it captures the destination of policy rather than its near-term trajectory, and should be interpreted as a structural anchor rather than a tactical signal. More (now at 2.23%) suggests that markets are adjusting to a view of slightly higher inflation over the medium term. This could imply persistent headwinds for growth as investors hedge against future inflation.
- Growth vs. Inflation Narrative:
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Bottom Line
This week’s data signals ongoing uncertainty, but the general tone is one of market stabilization rather than outright panic or bullish optimism.
Key takeaways:
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- Mild bear flatteningA bear flattener is a yield curve shift where short-term interest rates rise faster than long-term rates and often signals potential economic contraction or slower growth ahead. More suggests that while inflation risks remain a concern, the market is not expecting drastic policy changes in the short term.
- The rise in long-end yields indicates that inflation pressures are still visible, but not causing extreme market movements.
- The move in credit spreadsIn the bond market, it is the difference in yield between a corporate bond and a "risk-free" government bond of the same maturity. It represents the extra interest investors demand to compensate for the risk that a company might default. More is modest, indicating confidence in the credit market, but with slight caution creeping in.
- Lower rate volatility supports a calmer environment, but risks tied to inflation and growth remain in the background.
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While the market has settled into a more balanced phase, the outlook for equities and credit remains influenced by inflation risks, and the pressure on valuations from higher yields is still a key factor.
| Metric | (bp) | Comment |
|---|---|---|
| 2yr - 3mo | +9 | Terminal rateThe anticipated peak interest rate at which a central bank concludes a monetary tightening cycle to achieve a sufficiently restrictive policy stance. More might have been reached. |
| 10yr - 3mo | +62 | Recession worries fading |
| 10yr - 2yr | +53 | Fairly robust signal of economic "normalization" |
| AaaAaa represents the highest rung of investment-grade corporate debt, indicating top-level creditworthiness and the lowest default risk. More - 10yr | +110 | healthy, standard spread for top-tier credit, indicating no signs of stress in the plumbing of the financial system. |
| HY-OAS | +286 | Market reassessing credit crunch odds. |
| MOVE Index | +66.97 | Dampening volatility is a significant “calming” signal. |
| 5Y5Y Forward Rate5Y5Y forward rate provides a market-implied view of where policy ultimately settles once cyclical forces dissipate. Importantly, it captures the destination of policy rather than its near-term trajectory, and should be interpreted as a structural anchor rather than a tactical signal. More | 2.23% | Fed policy remains restrictive relative to its longer-run equilibrium. |
| 5Y Breakeven Inflation Rate | 2.61% | Inflation expectations remain somewhat above target |
