Higher yields boost investors and test borrowers in 2026 bond market

The 10‑year Treasury yield fell from 16% in 1981 to 0.5% in the summer of 2020, while the 10‑year AAA MMD yield peaked at 11.50% in 1981 and bottomed at 0.58% in 2020, reshaping the bond market.

Higher yields create opportunities for investors and test borrowers, as federal debt maturing in a higher‑rate environment will likely be refinanced at greater cost, affecting interest payments and budget capacity.

Municipal bond investors can benefit from attractive M/T ratios, especially in K‑12 education, higher education, and health‑care sectors, while public entities must adjust credit selection to manage capital projects in a persistently higher‑rate environment.

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