SOFR vs 10Y Treasury Yield
Live side-by-side comparison with current values, changes, and key statistics.
Why This Comparison Matters
SOFR is the overnight risk-free rate; DGS10 is the 10-year. Their spread captures the slope of the risk-free curve. When SOFR rises above DGS10, the curve is inverted and recession signals typically follow within 12-18 months. A steep positive spread signals accommodative short rates and inflationary steepening, historically supportive of cyclical equity leadership.
Cross-Asset Analysis
SOFR (secured Overnight Financing Rate, replacement for LIBOR, reflects overnight repo rates) and 10Y Treasury Yield (yield on 10-year US Treasury, the global risk-free benchmark) are priced in separate markets, yet their co-movement tells macro desks something neither series reveals alone. SOFR anchors more heavily to the expected policy path, while 10Y Treasury Yield picks up more term premium and structural supply-demand pressure. Quantitative easing and tightening warp the SOFR-10Y Treasury Yield relationship whenever the Fed concentrates purchases or runoff at one end of the curve more than the other.
Hiking cycles historically pull SOFR and 10Y Treasury Yield closer together, with several of the recent decades' cycles inverting this spread well before the next recession became visible. The SOFR-10Y Treasury Yield relationship can diverge during repo stress, Treasury auction pressure, and foreign reserve outflows, each of which distorts one leg without changing the underlying macro story. Late-cycle environments force SOFR to track the policy peak while 10Y Treasury Yield starts discounting the eventual easing, producing the classic inversion that accompanies tighter financial conditions.
Foreign central bank demand for specific maturities can hold 10Y Treasury Yield lower than the domestic macro picture implies, compressing the SOFR-10Y Treasury Yield spread for prolonged stretches. Convexity hedging by mortgage investors and pension liability matching move SOFR and 10Y Treasury Yield around in ways that fundamentals alone cannot explain.
90-Day Statistics
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Frequently Asked Questions
What is the relationship between SOFR and 10Y Treasury Yield?+
SOFR and 10Y Treasury Yield are connected through the Treasury yield curve and monetary policy expectations. When the policy rate path shifts, both respond, though with different sensitivities and at different speeds. The spread between SOFR and 10Y Treasury Yield captures the specific macro signal that flows through this relationship.
When does SOFR typically lead 10Y Treasury Yield?+
SOFR tends to lead 10Y Treasury Yield during policy regime shifts, where the short end moves before the long end reprices. In those periods, moves in SOFR precede corresponding moves in 10Y Treasury Yield by days to weeks, depending on the transmission channel and the depth of each market.
How are SOFR and 10Y Treasury Yield historically correlated?+
Long-run correlation between SOFR and 10Y Treasury Yield varies by regime. Yields at different maturities are typically positively correlated in direction but differ in magnitude, which is what makes the spread informative. The correlation is not stable: it shifts with macro conditions, and the periods when it breaks down are often the most informative moments in the SOFR-10Y Treasury Yield relationship.
What macro conditions drive divergence between SOFR and 10Y Treasury Yield?+
Divergence between SOFR and 10Y Treasury Yield typically arises from quantitative easing, quantitative tightening, foreign reserve flows, or term premium dislocations. When one asset's idiosyncratic drivers dominate, the spread moves in ways that the common macro story does not predict, which is usually a signal to look more carefully at the specific drivers at work in SOFR or 10Y Treasury Yield.
Is SOFR a hedge for 10Y Treasury Yield?+
Within the Treasury curve, SOFR is not typically a hedge for 10Y Treasury Yield; they are both duration exposures with different convexity and roll characteristics. Effective hedging requires matching the hedge to the specific risk being protected, and the SOFR-10Y Treasury Yield pair is best stress-tested under scenarios the investor most worries about before being sized into a real portfolio.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.