By late September 2026, TLT, the iShares 20+ Year Treasury Bond ETF, was trading near a fresh multi-year low. From its August 2020 peak around $180, its share price had fallen by more than half.
The bigger point is what happened after 2022. Long-duration bonds never produced the sustained recovery many investors expected. Long-term yields remained elevated, and although the Fed began cutting rates in 2024, the easing cycle was not enough to restore long-bond prices. TLT rallied at times, but by late September 2026 it remained far below both its 2020 peak and its level at the end of 2022.
What Happened After 2022
The bond market finished 2022 battered. The Bloomberg U.S. Aggregate Bond Index lost about 13%, one of its worst annual declines on record. For investors who expected bonds to provide stability, the scale of the loss was a shock.
The damage varied sharply by duration. Ultra-short Treasury funds such as BIL experienced very little price volatility while continuing to earn T-bill income. SHY, the iShares 1–3 Year Treasury Bond ETF, lost 3.9% in 2022. Intermediate Treasuries were hit harder: IEF, the iShares 7–10 Year Treasury Bond ETF, lost about 15%. Long-duration bonds took the greatest damage, with TLT losing more than 31%.
What followed was not a clean recovery.
In October 2023, the 10-year Treasury yield moved above 5% for the first time since 2007. Long bonds rallied later that year as investors anticipated lower interest rates, but the recovery repeatedly stalled as long-term yields remained elevated. SHY recovered its 2022 loss on a total-return basis the following year, while long-duration bonds remained much further below their earlier levels.
Why the Bear Market Extended
Why did pressure on long-duration bonds persist after 2022? The forces behind the original selloff did not simply disappear. Several remained in place, while others became more important.
Heavy Treasury supply met less Fed support. Federal deficits remained very large through 2023, 2024 and 2025, requiring substantial Treasury borrowing. At the same time, the Federal Reserve was reducing its securities holdings rather than adding to them. That balance-sheet runoff continued until late 2025, removing a major source of demand that had been present during the quantitative-easing era.
The term premium moved higher. Investors began demanding more compensation for holding long-term bonds and bearing the risk that rates might stay higher than expected. Estimates of the Treasury term premium rose from the unusually depressed levels seen during much of the previous decade, adding pressure to longer-term yields.
The Fed easing cycle was less powerful than many bond investors expected. The Fed eventually cut rates by 100 basis points in 2024 and another 75 basis points in 2025, but the path was neither as aggressive nor as one-directional as many long-bond bulls had hoped. By September 2026, the Fed had raised rates again by 25 basis points.
Inflation took longer to normalize. Inflation fell sharply from its 2022 peak, but underlying price pressures remained above the Fed’s 2% objective for longer than policymakers wanted. That limited how quickly monetary policy could ease and helped keep longer-term yields elevated.
Where Yields Sit Now
As of October 8, 2026, the Treasury yield curve was:
- 3-month: 4.23%
- 2-year: 4.75%
- 10-year: 5.22%
- 30-year: 5.60%
That is an upward-sloping curve, with longer maturities yielding more than shorter ones. It looks very different from the deeply inverted curve investors saw for much of 2022 through 2024, when short-term yields were above longer-term yields.
Two things stand out.
First, long-term yields above 5% are high compared with most of the post-2008 period, but they are not historically extraordinary. What feels unusual today partly reflects how long investors became accustomed to exceptionally low interest rates.
Second, the curve’s return to a positive slope does not tell investors where yields go next. The shape reflects a mix of expectations for future Fed policy, inflation, economic growth, and the extra compensation investors demand for holding longer-term bonds.
What Would Make This Bear Market End
Long-bond bear markets turn when the forces pushing yields higher begin to change. Several developments could do that.
A recession or sharp economic slowdown. A meaningful downturn could give the Fed room to cut rates more aggressively while also increasing demand for Treasuries as investors seek safety. That combination has pushed long-term yields sharply lower during past episodes such as the 2008 financial crisis and the early stages of the 2020 pandemic.
Inflation falling enough for sustained Fed easing. A recession is not required. If inflation moves convincingly back toward the Fed’s target while economic growth remains positive, the economy could achieve a “soft landing.” That could give policymakers room to cut rates without a recession, reducing pressure on bond yields.
A financial or credit shock. Banking stress, a credit event, or another disruption to financial markets could trigger a flight into Treasuries. Such rallies can be powerful, although they may prove temporary if the underlying pressure on long-term yields remains.
A return to large-scale Fed bond purchases. If severe economic or financial stress led the Fed to restart quantitative easing, purchases of longer-term Treasuries and mortgage-backed securities could put direct downward pressure on longer-term yields.
How Different Bonds Might React
The same catalyst would not affect every part of the bond market equally.
Recession and aggressive Fed cuts. Long-duration Treasuries would generally have the most upside if long-term yields fell sharply. TLT would be the most sensitive, followed by intermediate Treasury funds such as IEF. Broad bond funds such as AGG and BND would also benefit from falling rates, although widening credit spreads could offset part of that gain. SHY would experience much smaller price moves. Ultra-short funds such as BIL and SGOV would remain relatively stable in price, but their income would decline as maturing Treasury bills were replaced at lower yields.
Soft landing with gradual Fed cuts. Bond prices could benefit more moderately if inflation eased and the Fed cut rates without a recession. Long-duration funds would still be more sensitive to falling long-term yields, while intermediate and broad bond funds could see smaller price gains alongside their interest income. Short-term Treasury funds would experience limited price movement, while yields on BIL and SGOV would gradually reset lower.
Higher rates persisting. If inflation remained firm and long-term yields stayed elevated, long-duration bonds would remain the most exposed to further increases in yields. Intermediate and broad bond funds would be less sensitive, while short-duration Treasury funds would continue to experience relatively small price movements. Ultra-short funds such as BIL and SGOV would continue to reflect prevailing short-term Treasury rates as their holdings rolled over.
Sources and Further Reading
- iShares — iShares 20+ Year Treasury Bond ETF (TLT)
- iShares — iShares 7–10 Year Treasury Bond ETF (IEF)
- iShares — iShares 1–3 Year Treasury Bond ETF (SHY)
- iShares — iShares 0–3 Month Treasury Bond ETF (SGOV)
- iShares — iShares Core U.S. Aggregate Bond ETF (AGG)
- U.S. Department of the Treasury — Daily Treasury Par Yield Curve Rates
- Federal Reserve Board — Federal Open Market Committee Statements
- Federal Reserve Board — Federal Reserve Balance Sheet Developments
- Federal Reserve Bank of New York — Treasury Term Premia (ACM Model)
- U.S. Department of the Treasury, Bureau of the Fiscal Service — Monthly Treasury Statement