#US Treasury Bonds The Impact of Federal Reserve Rate Hikes on US Treasury Bonds

When the Federal Reserve raises interest rates to curb inflation, bond prices often fall (as yields need to rise to attract buyers). During the aggressive rate hike cycle from 2022 to 2023, the yield on 10-year US Treasury bonds soared from 1.5% to over 4%, resulting in paper losses for holders. However, high interest rates have also increased the coupon yields of newly issued Treasury bonds, attracting funds back. The current market is focused on the terminal rate and subsequent policy shift signals, which will determine the bullish or bearish direction of the Treasury bond market.