Pull back far enough and the panic about “high rates” starts to look a little silly.
This week’s chart runs from 1870 to today. That’s 156 years of what it cost Uncle Sam to borrow for the long haul. The shaded band marks 3% to 6%. Yields sat inside it 62% of the time.
The 10-year bond yield is sitting around 5% right now. That puts us square in the middle of the fairway.
The abnormal stretch on this chart is the decade and a half we just left. After the Great Financial Crisis, and again after Covid, rates fell to places they’d never been in a century and a half. The 10-year kissed roughly 1% in 2020. Money was basically free. Savers got nothing. And a whole generation of investors, borrowers, and corporate treasurers wired their assumptions to a number history says almost never shows up.
The spike the other way was just as strange. Yields ran to nearly 14% in 1981, when Volcker was breaking the back of inflation. I don’t think we can file that under normal either.
So we spent 15 years anchored to one extreme, and now we’re drifting back toward the boring middle. I think that’s healthy. Well priced risk is also healthy. When capital costs something, people allocate it with more care.
So now have to talk about the Fed, because someone always asks.
Everyone seems to want to trace the long end back to the last FOMC meeting. I think that’s mostly noise. The Fed has real command of the short end of the curve. The long end answers to a different set of bosses: inflation expectations, the term premium investors demand for locking up money a decade at a time, the economic growth outlook, and the sheer flood of Treasury supply Washington keeps issuing.
The recent bump in the funds rate will tug the front of the curve around. My view is it does little lasting damage, or good, to the 10-year. If long rates keep climbing from here, the culprit is fiscal deficits and inflation risk, not the people setting the overnight rate.
We think of risk first, because that’s our job. A 5% world only hurts if you spent the free-money years betting it would last forever. Very long-duration portfolios, business models that only work at zero, real estate underwritten at 3% into eternity. Those are what crack when normal comes back.
For everyone else, this is good news wearing a scary costume. Bonds pay again. Cash pays again. The tradeoff between reaching for risk and sitting in safety actually works.
Rates came home. The hard part is we forgot what home looked like.
Sources: Capital Group, Federal Reserve Bank of St. Louis, Robert Shiller. Long-term U.S. government bond yields, 1870 to 2026 (10-year Treasury from 1962; 2026 data as of 9/14/2026).