Investors often retreat to money-market mutual funds during times of financial stress, accepting lower yields compared with bonds in exchange for higher liquidity. Assets surged during the credit crisis to a peak of $3.92 trillion in January 2009, according to data from the Investment Company Institute. Money funds held $2.59 trillion in the week ended June 26, data from the Washington-based trade group show.

Money-fund yields averaged 0.04 percent this year, based on the Crane 100 Money Fund Index, with the yield for the week ended June 26 at 0.03 percent. U.S. equity mutual funds had assets of $6.61 trillion as of April, according to the most recent ICI data. Bond fund assets were $3.56 trillion.

Yields Rise

The benchmark 10-year Treasury yield rose 11 basis points, or 0.11 percentage point, to 2.04 percent on May 22 after Bernanke, in response to questions from Congress during testimony, indicated the central bank had given thought to reducing its stimulus at some point. The yield then rose 17 basis on June 19, the biggest move since 2011, to 2.35 percent, after the central bank chief said at a news conference in Washington “it would be appropriate to moderate the monthly pace of purchases later this year.”

Treasury yields soared as high as 2.61 percent on June 25, the highest level since August 2011, before declining to 2.49 percent at the end of last week.

The yield rose five basis points to 2.53 percent as of 9:51 a.m. in London.

With coupons this low, bond investors are seeing little return on their money. Real yields on 10-year Treasuries, after subtracting the annual inflation rate, were 1.09 percentage points as of June 28, compared with the 6.4 percent aggregate earnings yield of U.S. stocks, according to Fed data compiled by Bloomberg. While the gap between inflation and 10-year yields is the most since March 2011, it is half the 2.2 percentage point average for the past 20 years.

Jobs Added

An improving economy is dimming the lure of bonds as a haven. The Conference Board’s Consumer Confidence index rose to 81.4, exceeding all forecasts in a Bloomberg survey and the highest since January 2008, from a revised 74.3 in May, the New York-based private research group said June 25. Home prices have increased 12 percent since April 2012, according to the S&P/Case-Shiller Composite index.

The economy has added an average of 189,000 jobs each month through May, the fastest pace since 2005 when it created 207,000 positions per month, Labor Department data show. The unemployment rate fell to 7.6 percent in May, down from 8.1 percent in August. The rate for June may fall to 7.5 percent, according to the average estimate of 66 economists surveyed by Bloomberg.