Statistics · 2026 · Stocks
Interest Rates and Stocks Statistics (2026)
The 10-year Treasury yielded 5.29% on September 30, 2026, the 3-month Treasury bill 4.03% (discount basis), and the federal funds rate averaged 3.75% in September 2026. The S&P 500’s trailing earnings yield was 3.96% in June 2026, 0.51 points below the 10-year’s average of 4.47% that month: a rough gauge, not a like-for-like spread.
Key takeaways
- The 10-year Treasury yield was 5.29% on September 30, 2026, against 4.16% a year earlier.
- The federal funds target range is 3-3/4 to 4 percent, set September 16, 2026.
- The S&P 500 earnings yield trailed the 10-year yield by 0.51 points in June 2026; the earnings yield was below the 10-year yield in 388 of 774 months since January 1962.
- Stocks returned 11.3% in an average rising-yield year and 13.0% in a falling-yield year, a gap under 2 standard errors.
- Monthly federal funds rate rises of 1 point or more: the rule finds 20 episodes since July 1954, and stocks gained over 16 of them.
- The 3-month bill yielded 3.8 times the S&P 500 dividend yield in September 2026.
What are interest rates today?
The 10-year Treasury yield was 5.29% on September 30, 2026, the latest day in the Federal Reserve data this page uses. The 3-month Treasury bill yielded 4.03% on a discount basis, and the federal funds rate averaged 3.75% in September 2026. The Fed’s target range is 3-3/4 to 4 percent.
1. The 10-year Treasury yield: 5.29% on September 30, 2026, against 4.16% a year earlier
This is the constant-maturity yield (FRED series DGS10, nominal, quoted on an investment basis). 49.4% of daily readings since January 2, 1962 were at or below it; the high was 15.84% in 1981 (FRED DGS10) (WealthyBud data · 16,172 days · September 30, 2026).
2. The 3-month Treasury bill yielded 4.03% on September 30, 2026
FRED series DTB3 is the secondary-market rate on a discount basis, a different quote from the Treasury par yield, which read 4.20% for the 3-month bill that day (FRED DTB3). DTB3 averaged 3.94% across September 2026 (WealthyBud data · 21 days · September 2026).
3. The federal funds rate averaged 3.75% in September 2026, up from 3.63% in August 2026
FRED series FEDFUNDS is the monthly average of the effective rate, not the target range. Record high: 19.10% in June 1981 (FRED FEDFUNDS) (WealthyBud data · 867 months · September 2026).
4. The Fed’s target range is 3-3/4 to 4 percent, set on September 16, 2026
The September 16, 2026 statement says: “The Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent.” For home-loan rates, see mortgage rates.
5. Treasury’s par yield curve put the 10-year at 5.28% on October 2, 2026
The U.S. Treasury daily par yield curve is a different publication from the constant-maturity series. For September 30, 2026, both showed 5.29%.
What is the equity risk premium?
The equity risk premium is the extra return investors expect from stocks over safe bonds. This page uses a rough proxy: the S&P 500 trailing earnings yield minus the 10-year Treasury yield. In June 2026 that gap was −0.51 points, a nominal-to-nominal gauge, not a like-for-like spread.
6. S&P 500 earnings yield: 3.96% in June 2026
WealthyBud divides trailing 12-month as-reported earnings per share by the monthly average S&P 500 price. multpl.com publishes earnings in real, constant-July-2026 dollars, so we convert to nominal with CPI. The result equals 1 divided by multpl’s 25.22 P/E (P/E page). June 2026 is the latest reported month (WealthyBud data · 774 months · June 2026).
7. Proxy gap: −0.51 points in June 2026
The 3.96% earnings yield minus the 4.47% average of 21 daily 10-year constant-maturity readings. Both sides are nominal and from June, not the September yields above. The Shiller CAPE ratio page uses a real, ten-year-average earnings yield, so its gap differs by design (WealthyBud data · 774 months · June 2026).
How do stocks perform when bond yields rise?
Stocks have gained in both kinds of years. From 1963 to 2025, the S&P 500 returned 11.3% in an average year when the 10-year yield rose and 13.0% when it fell. That gap is within normal noise (under 2 standard errors), so ordinary year-to-year swings could produce it. This is an association in 63 years, not a cause.
8. 35 rising-yield years averaged 11.3%; 28 falling-yield years averaged 13.0%
Rule: a year is “rising” when the December average of the daily 10-year yield exceeds the prior December’s. Return is nominal total return, December-average to December-average, with dividends reinvested. Window: 1963–2025; none tied (WealthyBud data · 63 years · 2025).
9. The gap is 0.39 standard errors, within normal noise
A standard error shows how much an average would move with a different set of years. Here it is 2.7 points for rising years and 3.2 for falling years, so the standard error of the 1.6-point difference is 4.15 points. A gap under 2 standard errors could be chance (WealthyBud data · 63 years · 2025).
- In the 35 years when the 10-year yield rose, the S&P 500 returned 11.3% on average and 15.2% at the median; it gained in 25 of 35.
- In the 28 years when the yield fell, stocks returned 13.0% on average and 15.7% at the median; they gained in 24 of 28.
- The average in rising-yield years was below the falling-yield average, by 1.6 points.
10. Biggest yield rise: 1980 (+2.46 points), when stocks returned 30.2%
Biggest fall: 1982 (−3.18 points), when stocks returned 19.2% (WealthyBud data · 63 years · 2025).
How have stocks done during Fed rate-hiking cycles?
The rule used here finds 20 rises of 1 point or more in the monthly effective federal funds rate since July 1954. It does not match official Fed hiking cycles, and some last a few months. Stocks gained in 16 of them, with a median total return of 18.2%. With this few episodes, the result is an association only.
11. 20 rate-rise episodes since July 1954; stocks gained in 16 of them
Rule: a trough is confirmed when the monthly average effective rate rises 1.0 point above it, and a peak when it then falls 1.0 point below it. These are movements in the effective rate, not FOMC policy cycles, and 7 lasted six months or less. Total return runs trough to peak month: nominal, dividends reinvested, monthly average prices. Mean 26.4%, median 18.2% (WealthyBud data · 20 episodes · September 2026).
12. Since 1980, 9 of 10 episodes ended with stocks higher
The 10 episodes that began in 1980 or later ranged from −4.2% to 156.0%. Earlier rows come from a different policy regime, so the subsets are listed separately (WealthyBud data · 10 episodes · September 2026).
13. Longest episode: July 2011 to April 2019, 93 months, stocks 156.0%
The latest ran April 2020 to August 2023 (0.05% to 5.33%), with a total return of 68.8%. No episode is open now: the rate has risen 0.12 points from its May 2026 low of 3.63%, short of the 1.0-point rule (WealthyBud data · 20 episodes · September 2026).
| Trough month | Peak month | Fed funds rate (monthly avg.) | S&P 500 total return |
|---|---|---|---|
| July 1954 | October 1957 | 0.80% to 3.50% | 55.7% |
| May 1958 | November 1959 | 0.63% to 4.00% | 37.6% |
| January 1961 | February 1961 | 1.45% to 2.54% | 4.4% |
| July 1961 | November 1966 | 1.17% to 5.76% | 46.1% |
| July 1967 | August 1969 | 3.79% to 9.19% | 8.0% |
| March 1971 | August 1971 | 3.71% to 5.57% | −1.1% |
| February 1972 | September 1973 | 3.30% to 10.78% | 5.0% |
| February 1974 | July 1974 | 8.97% to 12.92% | −13.7% |
| May 1975 | September 1975 | 5.22% to 6.24% | −4.7% |
| January 1977 | April 1980 | 4.61% to 17.61% | 16.7% |
| Trough month | Peak month | Fed funds rate (monthly avg.) | S&P 500 total return |
|---|---|---|---|
| July 1980 | January 1981 | 9.03% to 19.08% | 13.6% |
| March 1981 | June 1981 | 14.70% to 19.10% | 0.5% |
| December 1981 | April 1982 | 12.37% to 14.94% | −4.2% |
| February 1983 | August 1984 | 8.51% to 11.64% | 19.6% |
| October 1986 | March 1989 | 5.85% to 9.85% | 33.4% |
| December 1992 | April 1995 | 2.92% to 6.05% | 24.4% |
| January 1999 | July 2000 | 4.63% to 6.54% | 20.1% |
| December 2003 | February 2007 | 0.98% to 5.26% | 41.2% |
| July 2011 | April 2019 | 0.07% to 2.42% | 156.0% |
| April 2020 | August 2023 | 0.05% to 5.33% | 68.8% |
Compare bond and stock ETFs
How do bond yields compare with stock earnings yields over time?
The earnings yield sat below the 10-year Treasury yield in 388 of 774 months (50%) since January 1962. It averaged 6.07% against 5.81% for the 10-year yield, a mean gap of 0.25 points. The gap swung from −4.45 to 5.82 points, and June 2026 fell at −0.51.
14. The earnings yield was below the 10-year yield in 388 of 774 months, a mean gap of 0.25 points
Median 0.00. June 2026’s −0.51 is at or above 42.1% of months. The widest shortfall was −4.45 points in September 1987; the widest surplus was 5.82 in December 1974 (WealthyBud data · 774 months · June 2026).
15. Correlation with the next 10 years’ nominal return: gap 0.18, earnings yield 0.59, 10-year yield 0.43
Pearson r over 654 overlapping start months, January 1962 to June 2016, with annualized nominal total return measured through June 2026. Windows overlap (about 5 independent decades), so these are associations (WealthyBud data · 654 start months · June 2016).
For rising prices and the same stocks, see inflation and stocks.
Do T-bills pay more than stock dividends?
Yes, at present. The 3-month Treasury bill yielded 4.03% on a discount basis on September 30, 2026. The S&P 500 dividend yield was 1.06% in September 2026, a multpl estimate built from dividends through June. The bill yielded 3.8 times the dividend yield, and stocks also offer price growth.
16. T-bill 4.03% vs dividend yield 1.06%: bills pay 2.97 points more
The dividend yield is multpl’s trailing 12-month dividend per share divided by price; multpl notes that yields after June 2026 are estimated from dividends through June (multpl.com). On monthly averages, bills yielded 3.94% against 1.06% in September 2026.
17. Bills out-yielded the dividend yield in 580 of 873 months since January 1954 (66%)
The last month the dividend yield was higher was June 2022; bills have paid more in each of the 51 months since. Monthly averages of DTB3 (discount basis) and multpl’s series (WealthyBud data · 873 months · September 2026).
What this means for investors
Rates are context for valuation, not a switch. Stocks gained in 25 of 35 rising-yield years and 24 of 28 falling-yield years, and the 0.39-standard-error gap is too small to rely on.
Read the earnings-yield gap as a rough gauge. At −0.51 points in June 2026 (June earnings against June’s average yield) it says stocks earn less than the 10-year yields in earnings terms. See the stocks hub for fundamentals.
Cash now competes with dividends. A 4.03% bill beats a 1.06% dividend yield. Bond funds such as AGG hold yield another way.
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