Revising up slightly our 10-year Treasury yield forecast (2024)

FAQs

What is the projection for the 10 year Treasury yield? ›

We are revising up our end-2024 and end-2025 forecasts for the 10-year Treasury yield by 25bp, to 4%. This reflects recent changes to our projections for the federal funds rate.

The 10-year note is undoubtedly a highly significant benchmark for global financial markets. A rising yield indicates investor confidence in the economy but also suggests higher borrowing costs, potentially slowing economic growth. Conversely, a falling yield may signal economic uncertainty.

If bond yields rise, existing bonds lose value. The change in bond values only relates to a bond's price on the open market, meaning if the bond is sold before maturity, the seller will obtain a higher or lower price for the bond compared to its face value, depending on current interest rates.

Treasury yields jumped Monday as investors reacted to a hotter-than-expected retail sales report and rising geopolitical tensions. The yield on the 10-year Treasury rose by more than 11 basis points to 4.612%, at one point touching its highest level since mid-November.

Although some volatility may continue, we believe interest rates have peaked. We expect lower Treasury yields and positive returns for investors in 2024.

The answer is both yes and no, depending on why you're investing. Investing in bonds when interest rates have peaked can yield higher returns. However, rising interest rates reward bond investors who reinvest their principal over time. It's hard to time the bond market.

Unless you are set on holding your bonds until maturity despite the upcoming availability of more lucrative options, a looming interest rate hike should be a clear sell signal.

Why Is the 10-Year Treasury Yield Important? The 10-year Treasury yield serves as a vital economic benchmark, and it influences many other interest rates. When the 10-year yield goes up, so do mortgage rates and other borrowing rates.

As for fixed income, we expect a strong bounce-back year to play out over the course of 2024. When bond yields are high, the income earned is often enough to offset most price fluctuations. In fact, for the 10-year Treasury to deliver a negative return in 2024, the yield would have to rise to 5.3 percent.

How much is a $100 savings bond worth after 30 years? ›

This time has been different: The 10-year Treasury yield has been hovering in a range above where it was when the Fed last hiked in July 2023. We believe the historical relationship should hold and we expect the 10-year Treasury ultimately to decline modestly from current levels as growth and inflation slow.

Historically, the US 10 Year Treasury Bond Note Yield reached an all time high of 15.82 in September of 1981. US 10 Year Treasury Bond Note Yield - data, forecasts, historical chart - was last updated on April 28 of 2024.

After bonds are initially issued, their worth will fluctuate like a stock's would. If you're holding the bond to maturity, the fluctuations won't matter—your interest payments and face value won't change.

Mortgage rates increased dramatically over the last two years, but they're expected to go down at some point this year. In March 2024, the Consumer Price Index rose 3.5% year-over-year. Inflation has slowed significantly since it peaked last year, but it has to slow further before rates will begin to fall.

Although the 10-year Treasury yield has briefly reached 5%, we expect it will end the year at 4.6% and decline to around 3% in 2025. We predict it will remain at approximately 3% over the next 10 years, well above the 1.9% average between 2009 and 2019 but low enough to drive recovery in real estate values.

Liquidity: CDs are not liquid accounts; the money is locked until the CD's maturity date, or you'll have to pay hefty penalties. T-bills provide more liquidity; they can be sold if you need cash fast.

Median Forecasts for 3-Month Treasury Bill Rate is at 4.75%, compared to 5.01% last quarter and 5.40% last year. This is higher than the long term average of 3.82%.