Reader Steven Kopits opines on the CBO projection: “by historical standards [1982-2007]we might expect the 10 year rate around 5.0% for the next decade”. I thought it useful to look at the data:
First the ten year Treasury yield.
Figure 1: Ten year Treasury yields, % (blue). NBER defined peak to trough recession dates shaded gray. Source: Treasury via FRED, Shiller database, CBO (January 2025), and author’s calculations.
I’d say it ill-advised to take the sample mean from 1982-2007 as representative. Here’s the spread.
Figure 2: 10yr-3mo Treasury spread, % (blue). NBER defined peak to trough recession dates shaded gray. Source: Treasury via FRED, NBER historical series, Shiller database, CBO (January 2025), and author’s calculations.