The bond market went on a rollercoaster ride in 2023. But, despite the wild gyrations, the 10-year Treasury rate ended the year exactly where it began.
As you can see on the chart above, the 10-year Treasury rate—the benchmark U.S. interest rate—fell to a low of 3.3% in the first quarter. That was back when the regional banks were coming under pressure, and investors were convinced the economy was about to tumble into a recession.
But, a few months later, the 10-year rate rose to nearly 5%, its highest point in roughly 16 years. The reason? A stronger-than-expected economy kept pumping out jobs, urging the Fed to keep raising rates throughout the summer.
And now, the rate is back to where it started 2023—about 3.88%—as investors are again anticipating an economic slowdown and Fed rate cuts in 2024.
For bond investors, it was undoubtedly a wild ride that might have felt like you were taking losses at times. But the silver lining is that intermediate-term Treasuries still managed to yield a gain of around 4% in 2023.
This is intended for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.
Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.
Past performance does not guarantee future results.