It’s Been a Long Time Since Bonds Looked This Good

Morningstar · Jeffrey Ptak, CFA · 2026-11-03 14:55 UTC

Yields are up, and durations are down, tilting the risk/reward in investors’ favor.

Yields are up, and durations are down, tilting the risk/reward in investors’ favor.

Bond yields have been rising for years now, and that’s been tough on fixed-income investors. Here are the trailing 10-year annual returns of some leading bond indexes as of Oct. 31, 2026. In all but one case, bond investors lost money after inflation.

While that’s been disappointing, it’s had a silver lining: Bonds’ risk/reward profile has greatly improved. To illustrate, here’s a chart in which I’ve plotted out the changes in the average monthly duration (a measure of interest rate sensitivity; that is, risk) and yield to maturity (that is, reward) of the iShares 7-10 Year Treasury ETF IEF.

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