US 10-year Treasury yield falls to 4.96% on Oct 22, 2026, back below 5%

Yields fell by about the same amount at every maturity

The Federal Reserve's H.15 release of selected interest rates shows a broad fall in Treasury yields on Thursday, Oct 22. The 10-year yield sets the tone for mortgage and corporate borrowing costs. It fell to 4.96% from 5.13%, down from 5.31% on Oct 5. Changes below are in basis points (bp), or hundredths of a percentage point.

• 2-year: down 16bp to 4.65%
• 5-year: down 17bp to 4.78%
• 30-year: down 13bp to 5.29%

The gap between 2-year and 10-year yields barely changed, at roughly 31bp.

Investors sought safety, but inflation expectations held

Most of the fall came from real yields, which strip out expected inflation. The 10-year yield on Treasury Inflation-Protected Securities (TIPS) fell to 2.64% from 2.76%. As a result, 10-year breakeven inflation, a market gauge of expected inflation, slipped only about 5bp, to around 2.32%. The move came as stocks linked to artificial intelligence sold off.

Policy rates held steady

The effective federal funds rate, the overnight rate banks charge each other, is 3.88%. The Fed's primary credit rate for loans to banks is 4.00%. The bank prime rate is 7.00%. Treasury bill yields remain well above the overnight rate: the 3-month is at 4.22% and the 1-month at 4.11%. Money markets still price some chance of a rate rise ahead of next week's Federal Open Market Committee (FOMC) meeting.

Bank lending and deposits grew in the week to Oct 14

The H.8 release on bank balance sheets shows steady growth. Figures are in billions (bn) and trillions (tn) of dollars.

• Bank credit at all commercial banks, seasonally adjusted, rose about $46bn to $19.995tn.
• Commercial and industrial loans rose to $2.993tn, about $70bn more than in mid-August.
• Loans to nondepository financial institutions rose about $8bn to $2.106tn.
• Deposits rose about $39bn to $19.81tn. Large time deposits rose to $2.62tn.