3 Things to Know About Last Week’s Surge in Treasury Yields

U.S. government bond yields spiked dramatically last week, with the yield on the 10-year note jumping by 0.5%. This move, one of the largest since October 2008, was exceptionally rare for the bond market—with a move of this magnitude expected to occur only 1% of the time.

Amid the recent spike, here’s what investors should know:

1. Macro issues have spilled into Treasuries.The unwind of a popular hedge fund trade and foreign selling potentially contributed to the rise in yields for long-duration Treasuries.
   
   
2. Treasuries still look attractive. Our estimate of the fair value yield on Treasuries is lower than current yields. This suggests to us the opportunity for capital appreciation, in addition to an attractive starting current yield.
   
   
3. Treasuries offer diversification benefits. Despite the near-term volatility, if economic growth slows beyond expectations, we believe Treasuries could serve as a useful cushion in a balanced portfolio by offsetting some of the potential softness in the stock market.

Spring surge

U.S. 10-year Treasury yields have risen sharply since the start of April

Source: Russell Investments, LSEG Datastream, April 2025