Treasury bond investors may argue that long-term debt may do better since higher borrowing costs typically slow spending and growth. Additionally, investors are confident that the Fed could contain inflation, which can eat away at overall real returns, or nominal yields minus inflation.

Since the late 1970s, “the Fed has gained a lot of credibility in getting inflation under control and the long end has responded very predictably,” Brandon Swensen, the co-head of U.S. fixed-income at RBC Global Asset Management, told Bloomberg.

Investors can also track long-term Treasury bonds through ETFs. For instance, the iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT), which has a 17.49 year duration and a 2.79% 30-day SEC yield, was up 0.6% year-to-date. The PIMCO 25+ Year Zero Coupon US Treasury (NYSEArca: ZROZ), which has a 27.24 year duration and a 2.96% 30-day SEC yield, was down 1.9% so far this year. The Vanguard Extended Duration Treasury ETF (NYSEArca: EDV), which has a 24.6 year duration and a 3.0% 30-day SEC yield, was 0.8% lower this year.

The Fed is set to start its sixth tightening cycle since 1979, with traders anticipating a 76% chance the Federal Open Market Committee will announce a rate hike of 0.25 percentage points on December 16. Moreover, traders have priced in two and three rate hikes in 2016, projecting a 0.77% effective rate by the end of next year.

For more information on the Treasuries market, visit our Treasury bonds category.

Max Chen contributed to this article.