Survey: Market pros see 10-year Treasury yield flat one year from now

Investment analysts surveyed by Bankrate expect Treasury yields to be relatively flat over the next 12 months as interest rate hikes by the Federal Reserve are likely over and the market looks ahead to possible cuts. Bankrate’s First-Quarter Market Mavens survey found that market experts see the 10-year Treasury yield at 4.18 percent a year from now, essentially flat from 4.20 percent at the end of the survey period on March 22, 2024.

However, most of the survey’s respondents see rates lower a year from now, with forecasts ranging from 3.50 percent to 5.0 percent.

“It must be said that investors who’ve powered through over the past four years or so have been rewarded,” says Mark Hamrick, Bankrate’s senior economic analyst. “That’s despite the pandemic, historically high inflation, aggressive Federal Reserve tightening and a flare-up in the banking sector.”

Forecasts and analysis:

This article is one in a series discussing the results of Bankrate’s First-Quarter 2024 Market Mavens Survey:

• Survey: Market pros see 10-year Treasury yield flat one year from now

• Survey: Stock market to inch up 2 percent over coming year, say experts

• Survey: Best ways to play the stock market’s momentum and allocate cash, according to experts

10-year yield expected to be stable over the next 12 months, analysts say

The 10-year Treasury yield has spent nearly all of the past two decades below 5 percent, reaching record lows during the COVID-19 pandemic as the Fed sharply cut rates to support the economy. At its bottom, the 10-year yield hit about 0.50 percent in August 2020, but began to rise as the economy recovered. Rates rose steadily throughout 2022, as the Fed aggressively hiked rates to combat inflation.

Investment professionals surveyed by Bankrate expect the 10-year yield to be 4.18 percent at the end of March 2025, up from the 3.98 percent level they expected it to reach at the end of December 2024, as indicated in the previous survey.

The survey’s estimates have generally tracked the overall path of interest rates, with forecasts ranging from 2.19 percent in the fourth quarter 2021 survey to 3.98 percent in the fourth quarter 2023 survey.

Analysts see decent yield opportunities in fixed income investments

Thanks to a rise in interest rates over the past few years, yields on fixed income investments are as attractive as they’ve been in some time. With the Fed expected to start cutting interest rates in 2024, some analysts see an opportunity to take advantage of higher yields.

“Higher yields from fixed income will act as a headwind for dividend-related strategies and we would favor traditional fixed income over those strategies,” says Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “With respect to CDs, we would begin to extend duration and lock in yields as the Fed will eventually cut rates, causing short-end yields to fall.”

Commonwealth Financial Network Chief Investment Officer Brad McMillan also sees an opportunity before the Fed begins to cut.

“At current rates, CDs can be part of the cash or short duration bucket in a diversified fixed income allocation,” McMillan said. “That said, we believe adding incrementally to duration today makes sense given where we are in the rate hiking cycle.”

While there is an opportunity to earn higher yields with fixed income securities than there has been in some time, most analysts said long-term investors should still favor stocks.

“Longer-term investors would likely post greater total returns with income-oriented stocks than with CDs, since stocks not only earn income but also offer price-appreciation potential,” said Sam Stovall, chief investment strategist at CFRA Research.

• Bankrate’s first-quarter 2024 survey of stock market professionals was conducted March 13-22 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; Sameer Samana, senior global market strategist, Wells Fargo Investment Institute; Hugh Johnson, chief economist, Hugh Johnson Economics; Patrick J. O’Hare, chief market analyst, Briefing.com; Charles Lieberman, chief investment officer, Advisors Capital Management; Brad McMillan, chief investment officer, Commonwealth Financial Network; Michael K. Farr, president and CEO, Farr, Miller & Washington; Marilyn Cohen, CEO, Envision Capital Management; Sam Stovall, chief investment strategist, CFRA Research; Kim Forrest, chief investment officer/founder, Bokeh Capital Partners; Kenneth Chavis IV, CFP, senior wealth counselor, Versant Capital Management; 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.