[US 10-Year Treasury Yield at 5.10%] Why do US Treasury ETFs fall when interest rates rise? Decoding from the 30-year bond auction
The day after seeing the news that “US Treasury yields have exceeded 5%,” you notice the valuation of the US Treasury ETF you hold has dropped. If you have just started investing in bonds, you might find this strange.
According to figures released by the US Department of the Treasury, the US 10-year Treasury yield on November 12, 2026, was 5.10%. This is an increase of 0.12 points from the 4.98% reported on the previous business day, the 10th. In the 30-year bond auction held on the same day, the yield at which the bonds were awarded was 5.441%, and the bid-to-cover ratio was 2.36 times.
Using the figures from this day, we will consider how much the price of a bond ETF can move and how exchange rates overlap with profit and loss when viewed in yen.
What happened in the US Treasury market on November 12?
Comparing November 10 and 12 in the US Treasury’s daily data, the major maturities moved as follows:
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2-year bond: 4.73% → 4.86% (+0.13 points)
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10-year bond: 4.98% → 5.10% (+0.12 points)
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30-year bond: 5.35% → 5.43% (+0.08 points)
The 11th was a US holiday, so the 10th is the most recent published value in the US Treasury’s daily table. This time, yields rose across all 2-year, 10-year, and 30-year bonds, with the magnitude of the increase varying by maturity. Although the 30-year bond auction took place on the same day, the yields for each maturity also reflect outlooks on monetary policy and inflation.
The 5.10% for the 10-year bond and 5.43% for the 30-year bond are market indicators for specific maturities published by the US Treasury. The 5.441% appearing in the auction results is the awarded yield for the 30-year bond issued this time. Both are US Treasury yields, but they measure different targets and time points.
How should we interpret the “2.36 times” bid-to-cover ratio for the 30-year bond auction?
The 30-year bond that the US Treasury put up for auction this time was $25 billion. According to The Wall Street Journal, the bid-to-cover ratio was 2.36 times, which was lower than the previous 2.54 times.
The bid-to-cover ratio represents how many times the total amount of bids received in the auction exceeds the amount awarded. When comparing with the previous auction, one should also check the auction conditions, such as the issuance amount and whether it is a new or reopened issue. Even if the ratio has decreased, you need to look at other figures to see at what price buyers were gathered.
Therefore, another figure to look at together is the difference between the awarded yield and the market yield just before the auction. This time, the awarded yield was 5.441%, and the market yield just before was 5.437%. The difference was 0.004 points, or 0.4 basis points. This means it was decided at a slightly higher yield than the level that had been traded in the market beforehand.
In this auction, the bid-to-cover ratio was lower than the previous one, but the difference between the awarded yield and the market yield just before was small. When following the bond market, it becomes easier to grasp changes in demand by looking at both figures.
Why do bond prices fall when yields rise?
Consider a bond that returns $100 at maturity and pays $4 in interest every year. When it becomes possible to obtain a higher yield from new bonds with similar conditions in the market, the appeal of buying existing bonds at the same price as before diminishes.
If the price of existing bonds falls, buyers can receive the same $4 in interest and the $100 at maturity for a lower purchase price. Through this price adjustment, the yield of existing bonds also rises.
The net asset value of a bond ETF is calculated based on the market value of the bonds held. Immediately after market yields rise, while the yield of bonds to be incorporated from now on becomes higher, the price of bonds already held may fall. The yield that new investors look at and the price movement that existing holders see in their accounts are looking at the same interest rate rise from different angles.
How much do long-term bond ETFs move? Estimating with duration
Duration is a measure of how sensitive the price of a bond or bond fund is to changes in interest rates. For small and generally uniform changes in yield, the impact on price can be estimated using the following formula.
Percentage change in bond price ≒ −Duration × Change in yield
For example, assuming the yield corresponding to the bonds held increases uniformly by 0.12 percentage points, the impact on the dollar-denominated price is as follows.
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Duration2 years results in approximately −0.24%
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Duration7 years results in approximately −0.84%
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Duration15 years results in approximately −1.80%
On November 12, the yield increase for 10-year and 30-year bonds actually differed. Even if you apply the +0.12 point increase of the 10-year bond directly to a long-term bond ETF, you cannot replicate that day’s price movement. When comparing products, check the investment maturity, effective duration, and the reference date of the figures in the asset management company’s materials.
For example, the US-listed IEF primarily targets US Treasuries with a remaining maturity of 7–10 years, while TLT targets those with over 20 years. Whether you hold the former or the latter, which maturity’s yield you should track to explain price fluctuations changes.
Japanese investors separate dollar-denominated and yen-denominated gains and losses.
When holding a US Treasury ETF without currency hedging, even if the dollar-denominated price falls, the decline in yen terms will be smaller if the yen weakens during the same period. Conversely, if the yen strengthens, the decline in yen terms will be greater.
For example, suppose the ETF price falls by 1.8% in dollar terms. Excluding distributions and expenses, the yen-denominated valuation changes as follows depending on how the dollar-yen exchange rate moves.
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Dollar-yen remains unchanged: approximately −1.80%
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Dollar-yen rises by 2% (yen weakens): 0.982 × 1.02 − 1 = approximately +0.16%
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Dollar-yen falls by 2% (yen strengthens): 0.982 × 0.98 − 1 = approximately −3.76%
If you only look at the yen-denominated profit or loss in your brokerage account, it becomes difficult to notice when a decline in bond prices has been offset by a weaker yen. First, check the price change in dollar terms, and then layer on the impact of the dollar-yen rate to make it easier to track the reasons for price movements. For products with currency hedging, also check the hedging policy and costs.
When you see a ‘yield in the 5% range,’ what should you check about the product?
The 5.10% US 10-year Treasury yield is a market indicator. The actual return when you buy an ETF varies depending on the bonds included, purchase price, holding period, distributions, expenses, and exchange rates. If the asset management company’s materials list multiple yields, check which period the figures refer to. A yield based on past distribution performance and an indicator that annualizes recent operating income using a specific method measure different things.
When holding individual fixed-rate bonds until maturity, you receive the face value at maturity if the issuer pays as promised. General maturity-based bond ETFs are managed by replacing bonds in accordance with index conditions. The amount an investor receives when selling is determined by the ETF price at that time.
When I research US Treasury ETFs, I look at them in the following order.
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Timing of fund usage: Is it money that will be used soon, or is it part of a long-term investment?
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Investment target and duration: Which maturity is held, and how much does a move in yields affect the price?
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Presence or absence of currency hedging: To what extent is it affected by a stronger or weaker yen?
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Price and distributions: In addition to changes in valuation, what was the total return including distributions?
Summary
On November 12, the US 10-year Treasury yield rose to 5.10%. In the 30-year bond auction, the bid-to-cover ratio was lower than the previous one, and the awarded yield was 0.4 basis points higher than the market level just before the auction.
When looking at the price movements of US Treasury ETFs, you can organize where your gains or losses came from by checking the interest rate of the maturity your product holds, its duration, and the dollar-yen rate in that order.
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❄️ Thank you for reading to the end. The next time you see news that “US interest rates have risen,” please open your monthly report to check which maturity your bond fund is invested in. If you found this helpful, I would appreciate your support with a like or a follow.
📖 References
https://home.treasury.gov/news/press-releases/sb0678
https://www.wsj.com/finance/jgb-yields-fall-as-hopes-for-accelerated-boj-tightening-eases-3eeccda2
*As of the morning of November 13, 2026 (Japan Standard Time). Yields and auction dates are based on US local dates. Price and exchange rate estimates are for illustrative purposes and do not represent the actual performance of individual ETFs.
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