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.
While shorter-term bond yields have declined significantly since 2023, yields on longer-term bonds are trending higher as 2024 ends. Investors appear focused less on recent Federal Reserve (Fed) interest rate cuts, and more on continued solid economic data and inflation trends.
The average of the Bloomberg-compiled forecasts suggests the US 10-year yield will finish 2025 around 4.12%.
The 3.11% composite rate for I bonds issued from November 2024 through April 2025 applies for the first six months after the issue date. The composite rate combines a 1.20% fixed rate of return with the 1.90% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U).
With the November 2024 update, I bonds now carry: New Fixed Rate of 1.20% New/Renewing Inflation rate of 1.90%
If you hold the bond for less than five years at the time when you cash it in, you will lose the last three months of accrued interest. On the other hand, you can avoid the I Bond withdrawal penalty by holding onto your bonds for the long haul.
The US 10 Year Treasury Bond Note Yield is expected to trade at 4.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 4.27 in 12 months time.
The bond market is caught between the Federal Reserve's plans to cut interest rates and the risk of higher inflation and federal debt levels. It looks like another bumpy ride is in store for fixed income investors in 2025, with a wide range of potential outcomes.
The future value formula is FV=PV*(1+r)^n, where PV is the present value of the investment, r is the annual interest rate, and n is the number of years the money is invested.
During the first half of a recession stage, core bond returns (i.e., Treasuries and investment-grade securities) are historically positive, while returns for high yield bonds, equities, and commodities are negative.
Global growth forecasts are largely unchanged from last quarter, with the pace of economic expansion in 2024 slowing moderately in 2025. Easing inflation, resilient consumers, and a broadening of central bank rate cuts underpin our expectations for a soft landing.
The average interest rates for 91-day, 182-day, and 364-day Treasury bills increased to 16.50 percent, 16.65 percent and 16.84 percent in April, 2024 from 16.14 percent, 16.18 percent and 16.36 percent in March 2024, respectively as shown in Chart 5.
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The National Association of Home Builders expects the 30-year mortgage rate to decrease to around 6.5% by the end of 2024 and fall below 6% by the end of 2025, according to the group's latest outlook.
In our opinion, real interest income alone is currently reason enough to invest, although we expect interest rates to fall slightly in 2024 and, as a result, also expect moderate upside potential for prices. Bonds now a fully fledged part of the investment universe after many years of low yields.
When interest rates rise, prices of existing bonds tend to fall, even though the coupon rates remain constant, and yields go up. Conversely, when interest rates fall, prices of existing bonds tend to rise, their coupon remains constant – and yields go down.
The firm is expecting better returns—albeit with higher volatility—from lower-quality bonds: a range of 5.3%-6.3% for US high-yield bonds and 5%-6% for emerging-markets sovereign bonds.
Source: U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates, as of November 25, 2024. 3-month Treasuries peaked at 5.52% on June 17, 2024. 2-year Treasuries peaked at 4.98% on April 10, 2024. 10-year Treasuries peaked at 4.70% on April 25, 2024.
Basic Info. 10 Year Treasury Rate is at 4.79%, compared to 4.77% the previous market day and 3.96% last year.
Treasury Yield and Federal-Funds Rate
Pappalardo says he predicts the 10-year Treasury yield will remain roughly between 3.5% and 5.0% in 2025.
The 4.28% composite rate for I bonds issued from May 2024 through October 2024 applies for the first six months after the issue date. The composite rate combines a 1.30% fixed rate of return with the 2.96% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U).
At an initial rate of 3.11%, buying an I bond today gets roughly 1% less compared to the 4.26% 12-month Treasury Bill rate (December 20, 2024). You could say that buying an I Bond right now is a 'fair deal' historically compared to 2021 & 2022 when I Bond rates were much higher than comparable interest rate products.
Use the Education Exclusion
With that in mind, you have one option for avoiding taxes on savings bonds: the education exclusion. You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you're using the money to pay for qualified higher education costs.