10 Year Treasury Impact on Financial Products
Chart of the 10-Year Treasury yield
The 10-Year Treasury yield is a cornerstone of financial markets. From 2020 to 2023, yields rose sharply, reflecting inflation concerns and Fed tightening. Since then, yields have mostly plateaued, hovering around 4.1% as of September 2025. Let’s breakdown how the performance of 10 -Year Treasury Yields impacts the following financial products:
1) Index Universal Life Policies (IULs)
High yields → More bond income → Larger options budget → Higher cap & participation rates.
Low yields → Less income → Smaller options budget → Lower caps, possible fee increases.
Client Takeaway:
Higher Treasury yields typically mean better growth potential in IUL policies.
2) Annuities (Fixed, Indexed, MYGAs)
Fixed Annuities & MYGAs:
• Directly tied to bond yields.
• Higher Treasury rates allow insurers to offer more attractive fixed returns.
Indexed Annuities:
• Similar to IULs, they rely on an options budget.
• Higher yields → Improved caps and participation rates.
Variable Annuities:
• Less direct impact, but bond fund performance and guaranteed income riders are influenced by Treasury trends.
Client Takeaway:
Rising yields enhance income potential and flexibility across annuity types
3) High - Yield Savings Accounts (HYSAs)
Bank Benchmarking:
• Banks use Treasury yields to set deposit rates.
• Online banks often respond faster than traditional institutions.
Impact:
• Rising yields → HYSA rates tend to increase (though not always proportionally).
• Falling yields → HYSA rates drop, sometimes rapidly.
Client Takeaway:
HYSA rates are sensitive to Treasury movements, especially in competitive online banking environments.
4) Whole Life Policies
The 10-year Treasury yield is a leading indicator of where whole life dividends are headed.
Insurers may hold bonds for 10–20 years, so changes in the 10-year Treasury yield take years to fully impact dividend scales.
Rising yields → eventual improvement in dividends and cash value growth.
Falling yields → pressure on dividends, slower cash accumulation.
Effects are gradual, not immediate, because of the long-duration bond portfolios insurers hold.
Bond Market Analysis 9/11/2025
The Vanguard Total Market Index has broken above its 200-week moving average, while the BND Bond ETF is also showing signs of a breakout. Equity markets appear to be interpreting potential Fed rate cuts as a catalyst for stronger corporate profits, while the bond market seems to be pricing in a faster pace of cuts due to economic weakness.
This raises the key question: Who will be wrong?
So far, the Nasdaq, S&P 500, and Dow Jones Industrial Average have all reached new all-time highs this week, even as the bond market continues to rally. Historically, stocks and bonds have tended to move in opposite directions — when stocks decline, money often shifts into bonds, pushing bond prices higher, and when stocks rally, funds typically rotate out of bonds and into equities.
Disclaimer:
I am not a licensed financial advisor, and the information provided is for educational and informational purposes only. It should not be considered financial, investment, or tax advice. Please consult with a qualified financial professional before making any financial decisions.