What happens to the 10Y once the Fed starts hiking? We modeled every tightening cycle since 1963.
With rates on the move like this we looked at what the 10Y does around the start of a hiking cycle. The chart shows the average across every cycle since the early 1960s, with the range of the individual cycles behind it.
A year after the first hike the 10Y is up around 100bp on average. More telling, only one cycle, 2004, saw yields fall at any point in that first year.
On the historical odds, yields are more likely than not to rise over the coming year.