Luke Delorme of Tableaux Wealth explains why rising interest rates push bond prices down: a bond paying $15 a year and bought for $1,000 would have to be sold for about $850 once new five-year Treasuries yield 5%. The 10-year US Treasury yield rose from about 4.7% at the end of August to more than 5.2% in early October, its highest in over two decades, which has likely meant negative returns for medium- and longer-term bond investors. Although prices have fallen, higher yields mean bonds now offer higher expected returns, and selling now would likely lock in a loss. Delorme notes that nobody knows where rates will go, and that bonds still deserve a place in portfolios for those nearing retirement.
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