U.S. Treasury yields remain elevated after a spike following President Trump's tariff announcements earlier this year. With long-term Treasury yields still close to multi-year highs, investors are tempted to pivot away from stocks in favor of the bond market at this time. The benefits could compound if the Fed lowers interest rates later in the year, likely increasing bond prices.
That said, bond volatility has made some investors skittish, and lingering inflation above the Fed's target levels threatens to keep interest rates in place—or could even lead to the Fed raising rates further. There is also the concern with inflation, which could negatively impact real returns despite higher nominal yields on long-term bonds.
