A sharp sell-off of U.S. government bonds has dropped bond prices and yields soared, catching investors off guard. Despite this volatility, advisors are urging their clients to take proactive steps to manage their portfolios.
Bond prices and yields move in opposite directions, meaning when bond prices fall, yields rise. However, the opposite happened this week, with Treasury yields rising as bond prices fell. This trend was temporarily halted when President Trump dropped tariffs to 10% for most countries but increased levies on Chinese goods.
As of Thursday afternoon, Treasury yields were down slightly due to President Trump’s decision. However, experts warn that “there’s a massive amount of uncertainty” about the future of trade policies.
The 10-year Treasury yield is closely watched because it influences borrowing rates for products like mortgages, credit cards, and auto loans. As investors sold off the asset, the yield climbed above 4.5% overnight on Tuesday. On Thursday afternoon, the 10-year Treasury yield was around 4.4%.
Advisors are advising clients to take a proactive approach by shifting allocations early based on threats of future tariffs. Certified financial planner Lee Baker has been increasing client allocations of Treasury inflation-protected securities (TIPS), which can provide a hedge against rising prices.
Ivory Johnson, another CFP and founder of Delancey Wealth Management, is taking a defensive stance with client portfolios by using instruments like buffer exchange-traded funds to limit losses while capping upside potential. Baker also recommends that investors take a “temperature check” on their risk tolerance and portfolio allocations amid market volatility.
With future stock market volatility expected, investors should review their comfort levels and consider shifting to more conservative holdings if needed. Advisors emphasize the importance of not selling investments due to market concerns but rather adjusting them to maintain comfort levels.
Source: https://www.cnbc.com/2025/04/10/bond-market-sell-off.html