Why Bonds Are Primed for Wild Swings By Larry Benedict, editor, Trading With Larry Benedict The bond market is primed for a burst of volatility in 2026. Already, around $9 trillion in Treasury securities are maturing this year. That must be refinanced. Much of it is the bill coming due from pandemic stimulus. In addition to the coming debt wall, the government needs up to $2 trillion in new borrowings this year, including spending linked to President Trump’s One Big Beautiful Bill. On top of massive borrowing needs, investors could face a crisis of confidence in the Federal Reserve. This year already promised fireworks when a new Fed chair takes over at the end of Jerome Powell’s term in May. Now toss in the Department of Justice’s subpoena against the Fed and Powell’s plan to fight back… and things could get interesting. So you need to closely monitor events in the bond market. These events could come back to bite your portfolio. Let’s discuss how you can take advantage instead… How Bond Yields Impact Your Portfolio A jump in interest rates is the usual reason for volatility in the bond market. While the Fed controls rates on the short end of the yield curve, longer-term bond yields are susceptible to the outlook for growth and inflation… and investors’ perception of credit risk and financial stability. Rising bond yields can dent investor portfolios in a couple of ways. First, remember that bond prices move inversely to interest rates. Bond prices fall when yields are rising (and vice versa). Given that bonds are the foundation of many retirement portfolios, rising yields can result in negative returns for a big piece of these portfolios. A jump in yields can also hurt stock prices. Rising rates diminish the value of future profits. Investors can quickly rethink how much they should be paying for a stock, especially when valuations become elevated. The last time we saw a spike in long-term interest rates happened in 2022 alongside the bear market in stocks. The 30-year Treasury yield went from 1.69% in December 2021 to 4.40% in October the following year. During that time, the S&P 500 declined as much as 25%. But that’s not all. The cornerstone retirement portfolio, consisting of 60% stocks and 40% bonds, had one of its worst returns ever because bond prices fell along with equities. So given the potential impact of bond yields on your portfolio, there are key chart levels you need to watch as 2026 unfolds. And if bond market volatility does jump, there’s an overlooked way you can take advantage. Tune in to Trading With Larry Live 
Each week, Market Wizard Larry Benedict goes live to share his thoughts on what’s impacting the markets. Whether you’re a novice or expert trader, you won’t want to miss Larry’s insights and analysis. Even better, it’s free to watch. Simply visit us on YouTube at 8:30 a.m. ET, Monday through Thursday, to catch the latest. | A Bearish Pattern for Bond Prices Given the challenges facing the bond market this year, investors should be on the lookout for a jump in yields. The 30-year Treasury yield is carving out a pattern that you should closely monitor. Here’s the chart below: 
(Click here to expand image) After peaking at the 5.0% level in late 2023, the 30-year Treasury yield is forming a new pattern that could be bearish for bond prices. It’s called an ascending triangle, which is shown with the dashed lines. As the 30-year yield keeps testing the 5.0% level, the pullbacks are growing smaller, as shown with the lower dashed line. Investors need to be on watch for a breakout above 5.0%, which could mark the beginning of another period of quickly rising bond yields (and falling prices). But you don’t have to fear the impact of a bond yield spike on your portfolio. I’m preparing members of my One Ticker Trader options advisory for trading opportunities on the iShares 20+ Year Treasury Bond ETF (TLT). (If you’d like to learn how to join us, go right here.) As the name implies, TLT tracks bond prices on the longer end of the yield curve. TLT also has a very liquid options market behind it, which means we can use options to take advantage of a jump in bond market volatility even if prices are dropping. So keep a close eye on the chart above, and be prepared if bond yields see a key breakout… Happy Trading, Larry Benedict
Editor, Trading With Larry Benedict P.S. If you haven’t watched Get Rich Slow yet, what are you waiting for? There’s only a short time left to learn my method for pulling a consistent income from the markets… which is even more powerful with AI’s impact. Watch here now. Free Trading Resources Have you checked out Larry’s free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here to check it out. | | 
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