Opportunity or Threat?

What's happening in the Treasury market right now hasn't happened in a very long time.

•   The 5-year Treasury yield is at 5.09% after topping 5% for the first time since 2007

•   The 10-year Treasury yield is at 5.30%, the highest since 2007

•   The 30-year Treasury yield is at 5.64%, the highest since 2002

At the risk of stating the obvious, 2002 and 2007 were not warm and fuzzy periods in market history. That fact alone is freaking people out, and I get it.

But as investors, our job is to manage risk and look for opportunities. And it's during these extreme periods that opportunities usually hide.

Income Is Hot

We've spent most of 2026 talking about hot inflation. Now I want to talk about hot income.

I've always thought of portfolio construction as balancing three goals: growth, preservation, and income. Depending on your particular situation, you'll decide which order of priority these deserve.

Generally speaking, younger investors (in this case, anyone 10 years or more away from retirement) typically do not prioritize income, so Treasury bonds are not often top of mind.

But at certain yields, Treasury bonds can also fulfill desires for preservation and growth. And I think that point is now.

Let me be clear that I am not calling a top in yields. In fact, I think U.S. yields may go even higher given the state of inflation, fiscal deficits, and rising yields in other parts of the world. So this isn't about timing the trade into bonds (i.e. dollar cost average rather than buy all at once). This is about the possibility that we may not see this environment again for some time.

What Investors Can Do

If you follow my commentary on television and other programs, this next part will come as no surprise. I find the 10-year Treasury attractive at these levels. What may be more of a surprise is that I have also started to find the 2-year Treasury and longer-term Treasuries more attractive than I did even one week ago. Additionally, I believe gold deserves an allocation in portfolios again.

From a technical perspective, every one of these assets looks attractive. For simplicity, our chart below shows the iShares 20+ Year Treasury Bond ETF (ticker TLT), which is trading below $80/share, its lowest level since inception.

Moreover, its 14-day relative strength index (RSI) is 25, which puts it squarely in "oversold" territory. Of course, it could go lower — and that's the risk — but we are at such an extreme level that I think the tradeoff between upside and downside favors the upside.

For investors who don't have the capital or ability to buy Treasury bonds directly, TLT is a good option. It's an ETF so it can be traded as often as stocks and with lower capital commitments. It can fluctuate more in price, however. So I'd say it's good for traders, but perhaps harder for investors uncomfortable with volatility.

Taking direct positions in Treasury bonds may be a slightly more attractive option. In the near-term, they offer attractive income streams given current yields. In the medium-term, they serve as a hedge against worries that economic growth could slow. And, you can always wait until a bond matures and receive the par value — meaning less downside risk for the capital you invested.

Lastly, here's why I like gold again: Gold effectively has a real yield of zero, right? So if and when Treasury yields do come down (and prices rise), all else equal there's less reason to buy Treasuries over gold. And I also think gold offers attractive diversification and preservation opportunities in this era of heightened geopolitical risk.

To many investors, these assets may seem simple, even old-school or boring. In my mind, they're anything but. It's important not to discriminate against an asset because you have a preconceived notion. After all, sometimes it's the boring things that surprise us most.

For educational purposes only. This content is not investment advice or a recommendation to buy or sell any security. Investing involves risk, including the possible loss of principal, and past performance does not guarantee future results. Any third-party information or links are provided for informational purposes only and do not constitute an endorsement or affiliation by SoFi.

Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth's advisory operations, services, and fees is set forth in SoFi Wealth's current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Liz Thomas is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Form ADV 2A is available at www.sofi.com/legal/adv.

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