In 2022, TLT (the long-term Treasury bond exchange-traded fund, or ETF) lost 31.2%. That was its worst year of the 23 full calendar years from 2003 to 2025 in our price files. IEF (the intermediate-term Treasury bond ETF) lost 15.2%, also its worst year. All returns in this guide include dividends, which are the payouts the funds make and reinvest.
Both funds hold only US Treasuries, which are bonds the US government issues to borrow money. The losses came as interest rates rose. This guide sets out what came before the losses: inflation, then seven rate rises by the Federal Reserve, then higher Treasury yields. Data run to 26 October 2026.
Why did the bond market crash in 2022? Inflation reached 9.1% a year in June 2022. The Federal Reserve (the Fed), the US central bank, raised its target interest rate seven times. A yield is the annual return a bond buyer earns at today's price. Yields rose, so bond prices fell. Bonds with longer to run fell furthest.
TLT lost 31.2% in 2022 and IEF lost 15.2%, with dividends counted. Each had its worst calendar year of the 23 from 2003 to 2025.
The 10-year Treasury yield, the yield on Treasuries with 10 years left, rose from 1.52% to 3.88%. The Fed lifted its target range for the rate banks charge each other overnight from 0% to 0.25% to 4.25% to 4.50%.
SPY (the S&P 500 ETF) lost 18.2% in the same year. A 60% SPY and 40% IEF mix lost 17.0%.
What came before the bond market crash in 2022?
Inflation rose first. The Consumer Price Index (CPI), a measure of consumer prices from the US Bureau of Labor Statistics, rose 7.0% over the 12 months to December 2021.
It peaked at 9.1% in June 2022. That is the highest 12-month rate of any month from January 2003 to September 2026 in the all-items series, not seasonally adjusted (CPIAUCNS). It was 6.5% in December 2022. Our explainer on what the Consumer Price Index measures has the method.
The Fed then raised interest rates. Its target range for the Fed Funds Rate, the rate banks charge each other for overnight loans, stood at 0% to 0.25% on 31 December 2021.
The Fed raised the range at seven meetings: 16 March, 4 May, 15 June, 27 July, 21 September, 2 November and 14 December 2022. We opened each statement.
Four of the rises were 0.75 percentage points, three-quarters of one point on the rate. They came on 15 June, 27 July, 21 September and 2 November. The other three were 0.25 points in March and 0.50 points in May and December. After the 14 December meeting the range was 4.25% to 4.50%.
The statements from June to December each say the Fed's rate-setting committee "is strongly committed to returning inflation to its 2 percent objective". The statement of 4 May 2022 also began Quantitative Tightening, which means the Fed letting its bond holdings shrink, on 1 June. Our explainers cover the 2022 rate hikes and Quantitative Tightening.
How far did Treasury yields rise in 2022?
The 10-year yield is the yield on Treasuries with 10 years left. The 2-year yield is the same for Treasuries with 2 years left.
Source: US Treasury; Federal Reserve Board H.15 (Treasury yields); FOMC (target range)
The step line is the Fed's target, shown as the upper limit of its range. It rose in seven steps, from 0.25% to 4.50%. Yields rose with it.
The 10-year yield rose from 1.52% on 31 December 2021 to 3.88% on 30 December 2022, a rise of 2.36 percentage points. Its highest close of 2022 was 4.25%, on 24 October. The 2-year yield rose 3.68 points, from 0.73% to 4.41%.
Why do bond prices fall when yields rise?
A bond pays a fixed rate of interest, called its coupon. When new bonds pay more, buyers pay less for the old ones. The old bond's price falls until its yield matches the new bonds'. Our explainer on bond prices and yields covers the link.
Here is our arithmetic, not a market quote. Take a 10-year Treasury issued at a price of 100 with a 1.52% coupon, the Federal Reserve's 10-year constant-maturity yield on 31 December 2021. A year later it had 9 years left. At the 3.88% yield on 30 December 2022 it was worth 82.22, a price fall of 17.8%.
A 20-year bond with a 1.94% coupon, the 20-year yield on 31 December 2021, had 19 years left. At the 4.14% yield on 30 December 2022 it was worth 71.25, a fall of 28.7%. The longer a bond has left to run, the further its price falls for the same rise in yields.
How much did bonds lose in 2022?
We measure from the close on 31 December 2021 to the close on 30 December 2022, with dividends counted. Chart 2 shows TLT's return in each of the 23 full calendar years, which start from the prior year-end close.
Source: YX Insights price data
TLT lost 31.2% in 2022. The next-worst year was 2009, at a loss of 21.8%.
IEF lost 15.2% in 2022, its worst year. The next-worst was 2009 again, at a loss of 6.6%. A $10,000 stake in TLT became $6,876 over 2022. One in IEF became $8,484.
Did bonds fall all at once in 2022?
Chart 3 follows the year day by day. It indexes each fund to 100 on 31 December 2021. We searched the closes of 2022 for each low.
Source: YX Insights price data
At its lowest close, on 24 October, TLT stood 36.6% below its 31 December 2021 close. IEF stood 18.2% below on 20 October. SPY stood 24.1% below on 12 October.
These are the worst points of the year. The full-year losses were smaller: 31.2% for TLT, 15.2% for IEF and 18.2% for SPY.
The losses built up through the year. TLT fell in 10 of the 12 months of 2022, on month-end closes. Its worst month, April, lost 9.4%.
Quarter of 2022 | Closes used | TLT | IEF | SPY | 10-year yield change, points | Fed target range at end |
|---|---|---|---|---|---|---|
First | 31 Dec 2021 to 31 Mar 2022 | −10.6% | −6.4% | −4.6% | +0.80 | 0.25 to 0.5% |
Second | 31 Mar 2022 to 30 Jun 2022 | −12.6% | −4.5% | −16.1% | +0.66 | 1.5 to 1.75% |
Third | 30 Jun 2022 to 30 Sep 2022 | −10.3% | −5.7% | −4.9% | +0.85 | 3 to 3.25% |
Fourth | 30 Sep 2022 to 30 Dec 2022 | −1.9% | +0.6% | +7.6% | +0.05 | 4.25 to 4.5% |
Total returns over the closes shown, dividends counted, before costs and tax. Source: YX Insights price data; US Treasury; Federal Reserve Board H.15 (10-year yield); FOMC (target range)
TLT lost 10.6%, 12.6% and 10.3% in the first three quarters. In the fourth it lost 1.9%, while IEF gained 0.6% and SPY gained 7.6%. The 10-year yield barely moved in the fourth quarter, rising 0.05 percentage points, against 0.66 to 0.85 points in each of the first three.
How did stocks and bonds do in 2022?
SPY lost 18.2% in 2022. IEF lost 15.2%. A mix of 60% SPY and 40% IEF, held from 31 December 2021 without rebalancing, lost 17.0%. That is 1.2 points less than SPY alone. Our explainer on the 60/40 portfolio covers the mix.
SPY and IEF both fell in only one of the 23 full years, 2022. Our guide to stocks against bonds compares the two.
Have bonds recovered since 2022?
Not by 26 October 2026, 4.82 years later. TLT was still 34.3% below its 31 December 2021 close. IEF was 7.8% below, a smaller gap than the 15.2% loss of 2022. SPY was 71.7% above.
The 10-year yield was 5.00% on 26 October 2026, above its 2022 high of 4.25%. Our comparison of IEF and TLT covers both funds from 2002.
What does this leave out?
The test covers two funds in one calendar year, before costs and tax. We used the 10-year yield, but TLT holds Treasuries with over 20 years left. The 20-year yield rose 2.20 points in 2022, from 1.94% to 4.14%.
For the mechanics in full, see our explainer on bond prices and yields.
Inflation rose. The Fed raised rates seven times, so yields climbed. Bond prices fell as yields rose. TLT fell furthest because its bonds have the longest to run. TLT lost 31.2% and IEF 15.2% in 2022.
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Common questions about the 2022 bond crash
Was 2022 the worst year for Treasury bonds?
In our price files, yes. Of the 23 full calendar years from 2003 to 2025, 2022 was the worst for both funds, with dividends counted. TLT lost 31.2% and IEF lost 15.2%. The files begin in July 2002, so they say nothing about earlier years.
How much would $10,000 in TLT have lost in 2022?
A $10,000 stake in TLT bought at the 31 December 2021 close was worth $6,876 at the 30 December 2022 close, with dividends counted. That is a loss of $3,124, or 31.2%. The same stake was worth $8,484 in IEF and $8,183 in SPY, the S&P 500 ETF.
Do all bonds fall when interest rates rise?
Bond prices fall when their own yields rise, but the fall is larger for bonds with longer to run. In 2022 TLT, which holds Treasuries with over 20 years left, lost 31.2%. IEF, which holds those with 7 to 10 years left, lost 15.2%.
What did the Fed do in 2022?
The Fed raised its target range for the Fed Funds Rate at seven meetings in 2022, from a range of 0% to 0.25% to one of 4.25% to 4.50%. Four of the rises were 0.75 percentage points. The 10-year Treasury yield rose from 1.52% to 3.88% over the same year. Our explainer on the 2022 rate hikes gives the path.
DISCLAIMER: This article is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
