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Survey: Expect 10-year Treasury yield to approach 4% over the next year, pros say

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Investment experts expect Treasury yields to head even higher over the next 12 months, as the Federal Reserve hikes interest rates in an attempt to control high inflation, according to a new Bankrate survey. The Second-Quarter Market Mavens survey showed that top pros expect the 10-year Treasury yield to rise to 3.8 percent from 3.3 percent at the end of the survey period on June 16, 2022.

Most analysts surveyed by Bankrate expect the 10-year rate to climb over the next 12 months, with forecasts ranging from 2.65 percent to 5 percent.

As concerns grow about the risk of a recession, most market experts said investors should stick to their long-term investing plans and take advantage of opportunities created by the market downturn.

Forecasts and analysis:

This article is one in a series discussing the results of Bankrate’s Market Mavens second-quarter survey:

Experts see 10-year yield heading higher in the next year

The yield on the 10-year Treasury spent a lot of time below 2 percent in recent years, as the Federal Reserve cut interest rates to help stimulate the economy during the COVID-19 pandemic. The 10-year yield bottomed in August 2020 and started climbing higher as the economic recovery strengthened. The yield finally ticked above 2 percent in February 2022, and experts expect rates to continue climbing higher over the next year.

Survey respondents see the 10-year Treasury yield reaching 3.8 percent by the end of the second quarter of 2023, above the 2.4 percent level they expected it to reach by the end of the first quarter of 2023, as shown in Bankrate’s prior survey.

The experts were surveyed during a period that included the Fed’s latest rate increase on June 15. The increase was highly anticipated, but the 75 basis point hike was the largest in nearly 28 years.

The respondents’ estimates have ramped up in recent surveys, with expectations for the 10-year yield increasing from 1.86 percent in the third quarter 2021 survey, to 2.19 percent at the end of the year and now to 3.8 percent in the most recent forecast.

What should investors do if we’re heading for a recession?

As the Fed raises interest rates to cool the economy and slow inflation, some investors are concerned that a recession could be on the horizon. So what should typical investors do in the face of heightened recession risks?

The experts surveyed by Bankrate had similar views on this question, with most saying that investors should stick to their long-term investment goals and take advantage of current investment opportunities.

“Stay fully invested consistent with long-term targets, while looking for opportunities to add equities on additional weakness,” says Jeffrey Buchbinder, equity strategist at LPL Financial.

“Stocks are falling sharply on the fear of recession. That creates attractive long-term investment opportunities in quality companies,” according to Briefing.com’s chief market analyst Patrick O’Hare. “With stocks of quality companies down 30, 40, and 50 percent or more off their highs, this is a moment where one can start accumulating stocks in those companies.”

Dec Mullarkey, managing director at SLC Management, said investors should keep their “asset allocation well aligned with long-term goals,” adding that “recessions are inevitable” and their timing as well as severity are hard to predict.

Methodology

Bankrate’s second-quarter 2022 survey of stock market professionals was conducted from June 9-16 via an online poll. Survey requests were emailed to potential respondents nationwide, and responses were submitted voluntarily via a website. Responding were: Dec Mullarkey, managing director, SLC Management; Brad McMillan, chief investment officer, Commonwealth Financial Network; Jim Osman, founder, The Edge Spinoff Research; Patrick J. O’Hare, chief market analyst, Briefing.com; Jeffrey Buchbinder, equity strategist, LPL Financial; Robert A. Brusca, chief economist, FAO Economics; Sam Stovall, chief investment strategist, CFRA Research; Chuck Carlson, CFA, CEO, Horizon Investment Services; Kenneth Chavis IV, CFP, senior wealth manager, LourdMurray; Kim Forrest, chief investment officer/founder, Bokeh Capital Partners; Marilyn Cohen, CEO, Envision Capital management; and Michael Farr, CEO, Farr, Miller & Washington.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

Written by
Brian Baker
Investing reporter
Bankrate reporter Brian Baker covers investing and retirement. He has previous experience as an industry analyst at an investment firm. Baker is passionate about helping people make sense of complicated financial topics so that they can plan for their financial futures.
Edited by
Senior wealth editor