Bond forecast: Pros see 10-year Treasury yield falling modestly in 2025

Investment strategists surveyed by Bankrate expect Treasury yields to decline slightly from current levels over the next year. Bankrate’s Fourth-Quarter Market Mavens Survey found that market pros forecast the 10-year Treasury will yield an average of 4.14 percent 12 months from now, up from last quarter’s projection of 3.53 percent.

Survey responses ranged from 3.55 percent to 4.75 percent among participants. The survey period ended Dec. 13, which was about a week before the Federal Reserve’s December meeting, where it cut interest rates by 25 basis points. Immediately following the meeting, Treasury yields rose, with the 10-year Treasury yielding around 4.49 percent. For context, the current trailing-12-month yield of the 10-year Treasury is 4.53 percent.

Investors have faced recent uncertainty surrounding persistent inflation, monetary policy and speculation about how President-elect Donald Trump’s policies regarding taxes and tariffs could impact economic growth.

“As suggested by veteran Maven Sam Stovall, history is worth noting as we ponder the possibilities for the market coinciding with the first year of the new administration,” says Mark Hamrick, Bankrate’s senior economic analyst.  

Here’s a closer look at how these various factors might shape the bond market in the coming months, according to Bankrate’s Market Mavens.

Forecasts and analysis:

This article is part of a series discussing the results of Bankrate’s Fourth-Quarter 2024 Market Mavens Survey:

• Bond forecast: Pros see 10-year Treasury yield falling modestly in 2025
• Survey: Experts share the top overlooked investment themes that deserve more attention in 2025
• Survey: Pros say stock market investors should brace for a slower pace of returns over coming year

Expect the 10-year Treasury yield to fall slightly over the next year

For context, the 10-year Treasury yield has mostly stayed below 5 percent over the past 20 years. During the COVID-19 pandemic, it hit a low of about 0.5 percent after the Federal Reserve cut interest rates to boost the economy. As the economy rebounded, yields began to rise (bond yields move inversely to bond prices). In 2023, the Fed’s move to tame inflation via aggressive rate hikes led to an increase in yields, which has continued to impact the economy throughout 2024.

Investment strategists surveyed by Bankrate see the 10-year Treasury yield at 4.14 percent at the end of December 2025. That’s up from the third-quarter 2024 prediction of 3.53 percent, but still slightly under 4.53 percent, the current trailing-12-month yield of the 10-year Treasury.

To put this into perspective, a 4.14 percent yield prediction indicates some level of uncertainty and an expectation that inflation could last longer than anticipated. In other words, there may be concerns that the Fed could have to take monetary policy actions to cool inflation amid expectations of growth under the Trump administration. 

When asked, “What is an overlooked or underappreciated idea/theme that you like and that investors should consider?” respondents of the Market Mavens survey provided a range of insights.

“The likelihood of elevated volatility,” is one of those themes, says Sam Stovall, chief investment strategist, CFRA Research. Stovall says that 90 percent of all first-year presidential terms since 1949 experienced price declines of 5 percent or more, with the average being 17.5 percent.

Know, however, that the S&P 500 has taken an average of only four months to fully recover from declines of less than 20%, Stovall says, and this positive performance is still projected for 2025. On top of that, Stovall forecasts that the 10-year Treasury’s yield will level off at 3.55 percent this time next year, indicating a balanced economic outlook despite potential market fluctuations. 

Despite any lingering uncertainty about Treasury yields and inflation, investors should take a long-term approach to navigating the market. Kenneth Chavis IV, senior wealth advisor at Versant Capital Management, noted diversification is often a theme that’s also frequently overlooked.

Hamrick echoed that sentiment, saying, “With the start of a new year, investors who haven’t recently looked at asset allocation and reviewed their assessment of risk might want to put these on their to-do lists.” He continued, “Among the questions to ask: ‘Do I need to make any adjustments to my portfolio?’ and ‘Will I be able to sleep at night with my current positions?’ Such reviews done regularly can help to avoid suddenly or emotionally responding to changes in market performance, and to investors’ evolving needs and objectives.”

• Methodology

  Bankrate’s fourth-quarter 2024 survey of stock market professionals was conducted Dec. 6-13 via an online poll. Survey requests were emailed to potential respondents nationwide, and responses were submitted voluntarily via a website. Responding were: Sameer Samana, senior global market strategist, Wells Fargo Investment Institute; Chris Fasciano, senior portfolio manager, Commonwealth Financial Network; Dec Mullarkey, managing director, SLC Management; Patrick J. O’Hare, chief market analyst, Briefing.com; Kenneth Chavis IV, senior wealth advisor, Versant Capital Management; Sam Stovall, chief investment strategist, CFRA Research; Hugh Johnson, chairman and chief economist, Hugh Johnson Economics; Michael K. Farr, president and CEO, Farr, Miller & Washington; Kim Forrest, chief investment officer/founder, Bokeh Capital Partners; Chuck Carlson, CFA, CEO, Horizon Investment Services.

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.