US Treasury yields have surged to multi-year highs following the Federal Reserve’s latest rate hike. The 10-year yield hit around 3.7% while the 2-year Treasury reached 4.1%. The rapid rise in bond yields has fuelled concerns amongst bond investors. Typically when interest rates – and by extension, bond yields – rise, bond prices fall.  Here’s an example that illustrates this concept. Let’s say you purchase a bond for $1,000 that matures in two years and pays a coupon of 2%. This means you will receive annual interest of $20, plus your original $1,000 investment back when the bond matures.  When interest rates go up, new bonds will be issued with the higher interest rate of say 3%. The “old” bond that pays 2% becomes less attractive to investors and they will not pay the “original” price of $1,000 for it. When this happens, the bond price falls and we...