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.