Image Source: Pixabay

A sudden spike in bond yields has been a major story in US markets lately. Yields on the 10-year Treasury note recently surged to the highest level since the financial crisis but have moderated somewhat since then due to safe-haven demand amid the Israel-Hamas conflict.

Interest rates have been inching higher since the Federal Reserve signaled that they are expected to stay higher for longer. Rising fiscal spending, a ballooning deficit, and political dysfunction in the US are also impacting the cost of borrowing.

Treasury bonds are now headed for a record third consecutive annual decline, led by losses in longer maturities. As short-term T-bills now offer an annualized yield of about 5.5%, bond guru Jeff Gundlach said it's "T-Bill and Chill" time for bond investors.

High-quality bonds with short maturities can help mitigate the risk of both rising interest rates and defaults during an economic slowdown. That's why investors have been pouring billions into these cash-like ETFs.

To learn more about the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report), iShares 0-3 Month Treasury Bond ETF (SGOV - Free Report), and JPMorgan Ultra-Short Income ETF (JPST - Free Report), please watch the short video above.

Video Length: 00:09:34

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