The 10-year Treasury yield in the United States finished out the year almost unchanged at 1.512 percent. The end of 2021 ended a year marked by the COVID-19 pandemic. The benchmark had begun the year at 0.91 percent and hit a high in March of 1.776 percent.
The 30-year Treasury bond yield fell 2 basis points, settling at 1.905 percent. Yields tend to move towards prices inversely. One basis point equals 0.01 percent.
Kathy Jones of Charles Schwab commented, “It’s certainly been a roller coaster year.” Jones is the head of fixed-income strategy at Schwab’s.
Jones said that the viral pandemic likely had the most significant influence on bonds in 2021. She said, “Covid led to the fiscal and monetary policy responses and all of the volatility we saw in the economic data. That was the big story in the market.”
Treasury yields have been turbulent throughout 2021 amid inflation concerns. They’ve also shifted as the Federal Reserve has eased away from monetary policies set during the pandemic. The central bank intends to speed up its tapering of monthly bond purchases in January. Thereafter, the Federal Reserve anticipates raising interest rates. Overall, key market strategists say the Treasury yields are likely to creep higher during 2022.
Lawrence Gillum, a fixed-income strategist for LPL Financial, said, “We expect interest rates to move modestly higher in 2022 based on near-term inflation expectations above historical trends and improving growth expectations once the impact of COVID-19 variants recede. Our year-end 2022 forecast for the 10-year Treasury yield is 1.75 to 2.00%.”
Gillum wrote and published his outlook earlier in the week on Monday. But Gillum said his team believes longer-term rates aren’t likely to move much higher during 2022.