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Interactive lesson

Bonds: the seesaw of price and yield

Why a “safe” government bond can lose money, why long bonds swing hardest, and what the yield curve says — with Treasury yields up to November 10, 2026.

10 steps · about 7 min · 70 points

  1. Look

    What a bond pays

    A bond is a loan with a schedule. Lend the US government $1,000 for 10 years at today’s yield of 4.98% and it pays you $49.80 a year (in two halves), then your $1,000 back at the end. In all, $1,498.

  2. Pick one

    Then rates rise

    The next day, new 10-year bonds pay 5.98%. You want to sell yours, which pays 4.98%. What will a buyer pay for it?

    1. Still $1,000: it is a government bond
    2. Less than $1,000
    3. More than $1,000
    Show the answer

    Less than $1,000. The price falls until your bond yields as much as a new one: lower price, same payments, higher yield.

  3. Guess

    How far does it fall?

    Rates went up one point, from 4.98% to 5.98%. Guess the change in your 10-year bond’s price.

    Show the answer

    −7.4%. −7.4%: the bond now sells for about $926. A 2-year bond would move only −1.9%, a 30-year bond −13.9%. The longer the loan, the longer you are stuck with the old rate.

  4. Explore

    The seesaw

    Three bonds bought today, all paying 4.98% a year: for 2, 10 and 30 years. Move the market yield and watch their prices.

    Which bond’s price swings the most when rates move?

    1. The 2-year
    2. The 10-year
    3. The 30-year
    4. All the same: they pay the same interest
    Show the answer

    The 30-year. Its line is the steepest: thirty years of payments fixed at the old rate.

  5. Look

    Duration: the length of the seesaw

    A handy rule: for each point the yield moves, a bond’s price moves about its duration in percent, the other way. At today’s yields that is 1.9 for a 2-year bond, 7.8 for a 10-year and 14.9 for a 30-year. So one point up costs a 30-year bond about 15%.

  6. Guess

    2022: the seesaw tips

    In 2022 the Fed raised rates fast. The 10-year yield went from 1.46% in December 2021 to 3.62% in December 2022. Guess the 10-year Treasury’s total return that year, interest included.

    Show the answer

    −15.0%. −15.0%. Interest of about 1.5% a year could not make up for a 2.2-point jump in yields. It was the worst calendar year for 10-year Treasuries in the index, which starts in 1872; the worst year besides it was 2013, at −7.9%.

  7. Put in order

    Short or long in 2022?

    Rank these Treasuries by their total return in 2022, best first.

    • 30-year bond
    • 3-month bill
    • 10-year note
    • 2-year note
    Show the answer
    1. 3-month bill — +1.7%
    2. 2-year note — −4.0%
    3. 10-year note — −15.0%
    4. 30-year bond — −29.2%

    Bills +1.7%, 2-year −4.0%, 10-year −15.0%, 30-year −29.2%. Bills were renewed at ever higher rates; the 30-year bond was stuck with its old rate for decades.

  8. Draw it

    Draw 36 years of rates

    The 10-year Treasury yield, as a yearly average. 1990 is given: 8.6%. Draw the rest, up to 2026.

    Show the answer
    19908.6%
    19966.4%
    20024.6%
    20083.7%
    20142.5%
    20200.9%
    20264.5%

    From 8.6% in 1990, yields slid for 30 years to 0.9% in 2020 (a daily low of 0.52% on August 4, 2020), then jumped. On the seesaw, falling yields lifted bond prices all that time — and 2022 gave a chunk back.

  9. Explore

    The yield curve

    Line up the yields from 3 months to 30 years and you get the yield curve. Usually it slopes up: lending for longer pays more. Pick a day.

    In May 2023, 3-month bills paid 5.31% and 10-year notes only 3.57%. A curve that slopes down like that is called…

    1. Inverted
    2. Steep
    3. Flat
    Show the answer

    Inverted. Short loans paying more than long ones is unusual, and markets watch it as a warning sign. More in Inverted yield curve.

  10. Done

    • A bond pays fixed interest; its price moves so that its yield matches the market’s.
    • Yields up, prices down — and the longer the bond, the bigger the swing: about 15% per point for a 30-year bond today.
    • In 2022, 10-year Treasuries returned −15.0% and 30-year bonds −29.2%, while bills earned +1.7%.
    • The yield curve lines up yields by maturity. When short rates top long ones, it is inverted.

Go deeper

DataUS bonds since 1871The 10-year Treasury’s total return, month by month.DataTreasury yieldsEvery maturity, every day since 1990.ArticleInverted yield curveWhen short rates top long ones, and what followed.DataFed funds rateThe short rate the Fed sets, since 1954.

How the numbers are made

  • Yields: US Treasury par yield curve, daily since 1990; a month’s figure is the average of its days. “Today” is November 10, 2026.
  • Prices on the sliders: a bond bought today at $1,000 that pays its yearly interest in two halves, priced at the market yield (semiannual compounding). Duration: the price change for a one-point move in the yield, at today’s yield.
  • 2022 returns: the 10-year from the site’s index of 10-year Treasuries (Robert Shiller’s method). The 2- and 30-year: our calculation with the same method from Treasury yields — each month a bond is bought at par at the month’s average yield and repriced a month later. Bills: one month of the 3-month yield each month.
  • No taxes, fees or trading costs.
  • Source: U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates.
  • Source: Robert J. Shiller, Online Data (S&P Composite, dividends, CPI, 10-year Treasury rate).
  • A lesson about how things work, not investment advice. Past returns do not guarantee future results.