What Do Rising Treasury Yields Mean For Your Investments?

Key takeaways

• Treasury yields are up again, hitting 3.589% compared to just 0.55% in 2020.
• This might seem like good news, but for existing bondholders it means a huge fall in the prices of their existing Treasuries.
• The inverse relationship between yields and prices has caused bond prices to crash, and it’s likely that they’ve got further to fall.
• Not sure what that means? We explain how that inverse relationship works and what investors can do about it.

After falling consistently since the early 1980s, Treasury yields are rising at the past pace we’ve seen in decades. The 10-year treasury rate has risen from an all-time low of just 0.55% in July 2020, up to 3.589% after a rise on Monday.

So what does this mean in plain english? Treasury yields are essentially the rate of interest earned on US government bonds. They’re considered to be just about the lowest risk investment you can get, because they’re fully backed by the security of the US government.