U.S. bonds had a whirlwind week, with some strategists seeing opportunities opening up for investors. The 10-year Treasury note yield last week reached 4.818%, a level not seen since November 2023 amid concerns around the impact of the U.S.-Iran war on inflation. The benchmark rate then pulled back following comments from a top Federal Reserve official in support of keeping central bank policy unchanged. On Friday, though, the 10-year crept back higher on a much hotter-than-expected jobs report . Rising yields have rattled equity market investors of late. The S & P 500 was virtually flat last week as yields climbed. Over the past month, the index is down slightly, while the 10-year has advanced roughly 16 basis points in that time. However, that move higher in yields is making certain parts of the yield curve more attractive, Oliver Shale, U.S. investment specialist at firm Ruffer, told CNBC. Specifically, he thinks increasing exposure to medium-term debt such as the 10-year Treasury. “We’re moving to a new regime, [and] to a world that’s characterized by more volatile inflation dynamics, and that the forces that suppressed inflation for decades are reversing … so, on the one hand, over the long term, yields are rising,” Shale said. “That’s not to say that bonds will always be a bad investment, and we are actually becoming increasingly interested or convinced that duration has a role to play at protecting a portfolio, particularly in a growth slowdown.” Bond yields move inversely to prices. So the more yields rise, the cheaper it becomes to buy them. Investors can buy U.S. 10-year notes directly through TreasuryDirect. They can also gain exposure through funds such as the iShares 7-10 Year Treasury Bond ETF (IEF). It has more than $42 billion in assets and charges 0.15% in fees . US10Y YTD mountain US10Y in 2026 5% a key level Gregory Faranello of AmeriVet Securities thinks an even bigger opportunity could present itself if the 10-year yield reaches 5%, or if the Fed raises rates later this month. The 10-year rate last scaled to the key 5% level in October 2023. However, traders are pricing in a 58% chance of a quarter-point rate increase on Sept. 16, according to the CME Group’s FedWatch tool. “If we move another 25 basis points here [or if] we get…maybe a little north of 5%, we like that as an opportunity,” said Faranello, his firm’s head of U.S. rates strategy. Investors should not scoop up loads of bonds right away, however. Instead, they should take a more measured, cautious approach, he added. “We’ve been advising our clients to not necessarily go in, but [to] scale in here in terms of duration,” Faranello said. He cautioned that some uncertainty exists around bonds as central banks back off from buying U.S. debt. Japan, which is a major buyer of U.S. Treasurys, has slowed its accumulation of the asset, leading its holdings to barely grow in absolute terms between 2011 and 2024, according to public policy think tank Brookings. That has left some investors to ask who will buy an ever-growing amount of U.S. debt. But, Faranello said that domestic buyers could step up to scoop up bonds, even as more are issued. “Over time, we need to find a home for this debt,” Faranello said, noting that the total federal debt in the U.S. topped $40 trillion for the first time this summer. “But, ultimately, we think that …the domestic money managers in general and investors will view any further back up in yields here as an opportunity.” Investors looking to play the rise in yields also have some options. HSBC last month highlighted several stocks that are positively correlated with the 10-year yields. Among them are private equity giant Apollo Global with a 32% correlation; Chevron at 26%; Alphabet at 21%; and Wells Fargo at 11%.

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