Why Is the 10-Year Treasury Yield Moving Right Now?
Andrew Davis
Founder, Equity Check
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If you closely, or even casually follow the financial news, you'll hear A LOT about the 10 year treasury. It's moved considerably in recent weeks.
Why all the fuss about the 10-year treasury?
The 10-year US Treasury is called the "risk-free rate." It's considered the safest investment in the world. Every other asset on earth is priced relative to it. You can think of it like the sea-level. When it rises, or in Al Gore's dream scenario, lowers, everything follows.
Your mortgage rate. Stock valuations. Private business values. Auto loans. HELOCs.
Why the jump?
More people selling the 10 year treasury than buying. Rates (yields) go up to attract new buyers. There are numerous factors affecting why this is, but for our purposes, inflation is the one to focus on.
There is widespread consensus that, due to the inflationary impacts of the Iran War, interest rates could rise, and markets have moved to pricing meaningfully higher odds that the Fed hikes later this year to combat inflation.
Why the inflation?
The Strait of Hormuz is responsible for roughly one-fifth of global oil and LNG trade, so disruption to it has driven oil prices up, significantly.
What this means for your investments?
I wrote about how stock returns aren't looking very enticing over the next 10-15 years, the same is looking to be true for bonds.
The 60/40 portfolio (60% stocks, 40% bonds) has been the default for 40 years. The pitch is simple — stocks and bonds move in opposite directions. From 1981 to 2021, they mostly did.
Then 2022 broke it. Stocks and bonds both lost roughly 20% in real terms. The 60/40 had its worst year since 1937.
So what's an investor to do?
Charlie Munger borrowed a line from a 19th-century mathematician:
Invert, always invert.
The way to figure out where to put your money is to first figure out where it gets destroyed. In an environment with sticky inflation and fiscal stress, the assets that get destroyed are long-term paper claims denominated in dollars (bonds). The assets that survive are the ones with pricing power and fixed-rate debt.
So… invest in assets that:
- Benefit from inflation. The asset can raise prices in step with inflation, not after a five-year lag.
- Have long-term fixed-rate debt. The largest expense is locked in for a decade while income rises.
- Cash flow, not duration. Returns distributed regularly, not compounded on paper for ten years and hoped for at the end.
A couple investments that do very well in an inflationary environment: Housing & Storage.
And that is what Equity Check exists to do — provide you with investments that are highly likely to deliver above average returns, because of their fundamentals, and because the people behind them are trustworthy and competent.
Frequently Asked Questions
Why does the 10-year Treasury yield matter to investors?
The 10-year Treasury yield is the benchmark "risk-free rate" that other assets are priced against, including mortgages, corporate borrowing costs, and stock valuations. When it rises, borrowing gets more expensive and future cash flows get discounted more heavily, pressuring asset prices across the board.
How much of the world's oil passes through the Strait of Hormuz?
Before the 2026 Iran war, roughly one-fifth of global oil and LNG trade transited the Strait of Hormuz, with some estimates for crude oil and petroleum products specifically running closer to a quarter.
Is the Strait of Hormuz open in 2026?
As of early July 2026, the strait remains effectively closed to normal commercial traffic despite a June ceasefire memorandum between the US and Iran, with daily transits running a fraction of pre-war volume.
Will the Federal Reserve raise interest rates in 2026?
As of the Fed's June 17, 2026 meeting, the Federal Reserve held its benchmark rate at 3.50%-3.75%. Markets are pricing meaningfully higher odds of a rate hike later in the year, though Fed Chair Kevin Warsh has said there's no urgency to move given easing inflation expectations.
Why did the 60/40 portfolio have its worst year since 1937 in 2022?
Rising inflation forced the Fed to raise rates aggressively in 2022, which caused stocks and bonds to fall together instead of offsetting each other. The traditional 60/40 portfolio lost between roughly 17% and 21% depending on methodology, the worst calendar-year performance since 1937.
What does Charlie Munger's "invert, always invert" mean for investing?
Munger borrowed the principle from 19th-century mathematician Carl Jacobi: instead of asking how to succeed, ask what would cause failure and avoid it. Applied to today's environment, that means identifying which assets get destroyed by sticky inflation (long-duration bonds) and steering toward the opposite (assets with pricing power and fixed-rate debt).
- 10-Year Treasury Yield
- Interest Rates
- Inflation
- 60/40 Portfolio
