The yield on the 10-year US Treasury climbed 50 basis points in September, starting the month at 4.11% and ending at 4.61%. Economists at UBS analyze bond outlook.

The case for bonds remains despite the recent rise in yields

Our base case is for the yield on 10-year US Treasuries to stand at 3.5% in 12 months, 4% in our upside scenario for growth, and 2.75% in our downside scenario of a recession. 

That would translate into total returns over the period of 14% in our base case, 10% in our upside economic scenario, and 20% in our downside scenario.