US Treasuries Extend Gains After Posting Best Year Since 2020

US Treasuries rose on the first trading day of 2026, getting off to a positive start after notching their best annual return in five years.

The 10-year yield dropped two basis points to 4.15%, reversing an increase in early trading. The 30-year yield was one basis point lower at 4.84%, after touching the highest since early September.

For all the volatility, 2025 proved to be a good year for US Treasuries with a Bloomberg index tracking the sector delivering a return of more than 6%. A measure of expected US bond-market volatility has also slumped to the lowest levels since early 2022.

The question now is whether US Treasuries can sustain those gains into 2026. Market consensus is for further interest-rate cuts this year, particularly given expectations that President Donald Trump will name a dovish successor to Federal Reserve Chair Jerome Powell, whose term ends in May.

Still, the US economy remains resilient. Data last week showed it expanded at the fastest pace in two years, complicating the case for further rate cuts in the near-term. US data releases resume later Friday with the S&P Global US Manufacturing PMI.