What's Up With the 10-Year Treasury Bond?

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published 21 May 2025

In times of economic uncertainty, all eyes are on the stock market.

In April, investors saw the S&P 500 Index decline 18.9% from its February peak. The index has recovered some of its losses, though it remains volatile.

During this volatile period, there has been much attention paid to the fluctuations of the 10-year Treasury bond.

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This instrument is widely recognized as a crucial indicator of the broader economic landscape and plays a pivotal role in the day-to-day operation of the global financial markets.

Its influence extends beyond the confines of government finance, impacting everything from mortgage rates to the overall cost of borrowing. This makes the 10-year Treasury an essential watchpoint for investors, economists and policymakers alike.

A quick primer on Treasury bonds

The federal government issues Treasury bonds to finance its operations, with maturities ranging from four weeks to 30 years. Ten-year Treasury bond investors are paid interest semiannually, known as the coupon rate, and receive their principal back at maturity.

During the bond’s holding period, however, investors may notice that the fair market value of their Treasury bonds fluctuates.

Usually, these movements are in response to interest rate changes. The key point for investors to remember is that bond prices and interest rates move in opposite directions.

As a bond’s maturity approaches, these fluctuations tend to be less dramatic.

What happened in April?

Since the stock market began its sharp drop in early April, the price of 10-year Treasury bonds has also declined. This development is curious, since during times of economic uncertainty, investors often seek the safety of Treasury bonds.

This increased investor demand should have resulted in higher, not lower, Treasury bond prices.

According to Steve Preikschat, client portfolio manager at Janus Henderson Investors, “Tariffs and the associated inflation risks are the primary culprits of the move higher in 10-year Treasury rates, (resulting in lower valuations) as investors demand higher yield compensation for lending capital in this uncertain environment.”

Erika Oquist, Janus Henderson Investors’ fixed-income specialist, further explains, “If the market is anticipating higher inflation, today’s 10-year Treasury coupon payments may not look so attractive in a few years. This sentiment has dampened demand, driving valuations lower.”

Next steps for investors

Our advice to bond investors is similar to what we’d recommend for stock investors: We think the best course of action is to remain patient and avoid making any rash decisions.

As Oquist points out, “Despite the fluctuations observed in April 2025, the fundamental attributes of Treasury securities in providing stability and safety in investment portfolios remain unchanged.”

Preikschat adds, “The silver lining of the move higher in 10-year Treasury yields (lower prices) is that today’s yields are extremely attractive for investors looking to add to their bond holdings.”

Both of our in-house fixed-income experts remain bullish on the benefits of properly diversified portfolios.

Despite the recent drop in prices, bonds have squeezed out about a 1.73% return so far in 2025 (as of May 13), as measured by the Bloomberg U.S. Aggregate Index, which tracks a basket of government and investment-grade corporate bonds.

In fact, bonds have performed exactly as advertised in 2025, buoying portfolios during a difficult period for stocks.

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According to Oquist, “Portfolios should be built for the long term, and that includes both growth-oriented investments as well as safer investments to help manage the risks and uncertainties inherent in the financial markets.”

Final words

Eventually, this recent bout of volatility in both the stock and bond markets will pass (although no one really knows when).

Ben Rizzuto, wealth strategist at Janus Henderson, recommends that investors “review their financial plan and remind themselves of the goals they created for the future. This exercise can often help investors transition from a short-term, emotional mindset to a calmer, more future-oriented outlook.”

For investors who have not created a financial plan, Rizzuto suggests now is a great time to do so.

Our experts agree on one thing — investors who exercise patience are likely to benefit over the long term.

The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a financial professional. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information. Janus Henderson is a trademark of Janus Henderson Group plc or one of its subsidiaries. © Janus Henderson Group plc.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Matt Sommer is a Managing Director and Head of Specialist Consulting Group at Janus Henderson Investors. His team consists of various subject matter experts across several disciplines, including retirement planning, wealth advisory, practice management and investment strategies. They provide clients actionable insight and expertise they can implement into their business practice to retain and gain clients. Prior to joining Janus in 2010, Dr. Sommer spent 17 years at Morgan Stanley Wealth Management and its predecessors, Citi Global Wealth Management and Smith Barney, during which time his roles included director of financial planning and director of retirement planning.