Treasury bonds and related exchange traded funds have been on a tear as the yield on benchmark 10-year Treasury note dropped to its lowest level ever Wednesday.

Year-to-date, the iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF) rose 8.6% and iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) gained 19.4%. Both funds are trading near their all-time highs.

Related: Treasury ETFs Climb as Yields Hit Record Lows

The Treasury market has strengthened, with yields on benchmark 10-year notes hovering around 1.38% after trading as low as 1.321% Wednesday. Bond prices and yields have an inverse relationship, so falling yields correspond with rising prices.

Now, fixed-income observers are eyeing the 1% mark as further volatility could potentially push yields even lower and help support an extended bond rally.

“If the global and U.S. [economies are]pulled down by Brexit, then yields have room to fall, and potentially we could see 10-year U.S. yields below 1%,” Jae Yoon, chief investment officer at New York Life Investment Management, told the Wall Street Journal.

[related_stories]

Alternatively, Yoon believes yield could climb back above 2% if the United Kingdom and the European Union make “an amicable divorce,” work out trade issues and assuage market fears.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.