Treasury Yields Near 20-Year Highs Give Income Investors Choices They Haven't Had Since 2002

For savers who remember earning real interest on a bank CD, 2026 may feel like a return to the old days. Government bond yields are near their highest levels in more than two decades, and some CDs pay over 5%.

Yields not seen since 2002

On Oct. 7, the 10-year Treasury yield closed at 5.28% and the 30-year at 5.67%, near the highest levels for those maturities since 2002, according to Investopedia. Yields have climbed as inflation has run hotter than expected and investors have priced in the chance of higher interest rates.

Rising yields are bad news for people who already own long-term bonds, because older bonds paying less lose value. But they are good news for anyone with cash to put to work.

CDs: shop around

The best CDs are keeping pace. Top nationwide CDs paid between 4.50% and 5.25% APY as of Oct. 15, according to WSJ Buy Side, and Forbes Advisor found top rates up to 5.07%.

The national averages are far lower. The FDIC's average 12-month CD rate is just 1.73%, compared with an average of 4.72% among top high-yield CDs, according to DepositAccounts.com. Bankrate's national averages show a one-year CD at 2.15% APY and five-year at 1.82%. In other words, staying with your local bank could cost you more than half your interest.

You don't have to lock up money for 30 years

Long-term bonds offer the highest yields, but shorter-term Treasurys are also paying well, Investopedia noted. That gives savers a more practical option than committing money for 10, 20 or 30 years.

Many retirees build a "ladder": splitting money among bonds or CDs that mature in, say, one, two, three, four and five years. As each one matures, you can spend it or reinvest at whatever rates are available then.

What sets these rates in the first place

Treasury yields move based on supply and demand for U.S. government debt, which is shaped by inflation expectations, the size of federal budget deficits, and what investors expect the Federal Reserve to do with short-term interest rates. When investors expect inflation to stay elevated, they generally demand a higher yield to lend money for years at a time, since inflation erodes the value of fixed interest payments over time.

Banks set CD and savings rates with an eye on those same Treasury yields and on the Fed's benchmark rate, but they also compete with each other for deposits. That's why online banks, which have lower overhead than branches with tellers and buildings, often pay noticeably more than large traditional banks for the same type of CD.

CDs versus savings accounts versus Treasurys

A CD locks in a fixed rate for a set term in exchange for a penalty if you withdraw early, while a high-yield savings account lets you access your money anytime but its rate can change at any point. Treasurys sit in between: you can sell one before it matures on the open market, but its price will have moved up or down with interest rates since you bought it, so you aren't guaranteed to get your full principal back if you need the cash early.

For money you're confident you won't need until a specific date, locking in today's yield can make sense. For an emergency fund you might need on short notice, a high-yield savings account or a short-term Treasury bill remains the more flexible choice.

What it means for you

• Compare your bank's CD and savings rates with top online banks and Treasurys.
• Buy Treasurys directly at TreasuryDirect.gov or through a brokerage account.
• Keep CDs within FDIC limits of $250,000 per depositor, per bank, per ownership category.
• Check early-withdrawal penalties before buying a CD.
• Remember that bond prices fall when rates rise; holding to maturity avoids locking in a loss.

The bottom line

After years of near-zero returns on safe money, income investors finally have real choices. Locking in some of today's yields can bring predictable income to a retirement plan, but compare carefully, and match maturities to when you'll actually need the money.

Sources: Investopedia (Oct. 7, 2026), WSJ Buy Side (Oct. 13 and Oct. 15, 2026), Forbes Advisor (Oct. 15, 2026), Bankrate (Oct. 2, 2026)