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Is There Such A Thing As “Normal” Interest Rates?

November 23, 2023

Since the Great Recession of 2008, interest rates as measured by the 10-Year Treasury yields were very low. Many people have been lulled into thinking this is “normal” but it isn’t. If there is an anomaly, it is actually the abnormally low yields.

Below is the average yield by year starting in 1980 when inflation was high.

YearAverage YieldYearAverage Yield
198011.43%20024.61%
198113.92%20034.01%
198213.01%20044.27%
198311.10%20054.29%
198412.46%20064.80%
198510.62%20074.63%
19867.67%20083.66%
19878.39%20093.26%
19888.85%20103.22%
19898.49%20112.78%
19908.55%20121.80%
19917.86%20132.35%
19927.01%20142.54%
19935.87%20152.14%
19947.09%20161.84%
19956.57%20172.33%
19966.44%20182.91%
19976.35%20192.14%
19985.26%20200.89%
19995.65%20211.45%
20006.03%20222.95%
20015.02%2023

Source: Macrotrends.net

Kristy Akullian, iShares senior investment strategist at BlackRock said, “The last 15 years were the exception rather than the norm.” Akullian further indicated over the last 60 years, the average yield for the 10-year Treasury was 5.9%.

While we adjust to an environment with higher yields, there is a silver lining. Finally, buying all types of bonds is actually paying the bond holder interest. This is especially positive for all bond investors.

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