The rising yields on U.S. government debt, which sent the 10-year Treasury rate near 5%, a level not seen in 16 years, has posed a challenging environment for stock market investors.
The 10-year Treasury BX:TMUBMUSD10Y yield ended Thursday at the highest level since 2007 just shy of 5%, before drifting back down on Friday. The 30-year Treasury BX:TMUBMUSD30Y rate also posted its highest close since 2007 on Thursday before pulling back.
Bond market volatility is also elevated compared to historical levels. The ICE BofA MOVE Index, known as the bond market “fear gauge,” in early October hit 142, its highest level since May. It stood at around 135.5 on Friday, according to FactSet data.
“I think we’re in a new era where having bonds is not safe. Bonds are not risk free — the 30 year Treasury lost more than the Nasdaq in 2022,” said Nancy Davis, portfolio manager for the Quadratic Interest Rate Volatility & Inflation Hedge ETF IVOL.