As investors digest the latest bond market sell-off, advisors have tips about portfolio allocation amid continued market volatility.

Typically, investors flock to fixed income like U.S. Treasurys when there’s economic turmoil. The opposite happened this week with a sharp sell-off of U.S. government bonds, which dropped bond prices as yields soared. Bond prices and yields move in opposite directions. 

Treasury yields then retreated Wednesday afternoon when President Donald Trump temporarily dropped tariffs to 10% for most countries but increased levies on Chinese goods. That duty now stands at 145%.

As of Thursday afternoon, Treasury yields were down slightly.

Still, “there’s a massive amount of uncertainty,” Kent Smetters, a professor of business economics and public policy at the University of Pennsylvania’s Wharton School, told CNBC.

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Experts closely watch the 10-year Treasury yield because it’s tied to borrowing rates for products like mortgages, credit cards and auto loans. The yield climbed above 4.5% overnight on Tuesday as investors offloaded the asset. As of Thursday afternoon, the 10-year Treasury yield was around 4.4%.

Kevin Hassett, director of the U.S. National Economic Council, told CNBC on Thursday that bond market volatility likely added “a little more urgency” to Trump’s tariff decision. 

As some investors question their bond allocations, here’s what advisors are telling their clients.

Despite the latest bond market sell-off, there hasn’t been a recent shift in client portfolios for certified financial planner Lee Baker, owner of Apex Financial Services in Atlanta. 

“I’ve been taking a proactive approach” by shifting allocations early based on the threat of future tariffs, said Baker, who is also a member of CNBC’s Financial Advisor Council.

With concerns about future inflation triggered by tariffs, Baker has increased client allocations of Treasury inflation-protected securities, or TIPS, which can provide a hedge against rising prices.

Ivory Johnson, a CFP and founder of Delancey Wealth Management in Washington, D.C., has also been defensive with client portfolios. 

“I’ve used instruments to give me guardrails,” such as buffer exchange-traded funds to limit losses while capping upside potential, said Johnson, who is also a member of CNBC’s FA Council.

Buffer ETFs use options contracts to provide a pre-defined range of outcomes over a set period. The funds are tied to an underlying index, such as the S&P 500. These assets typically have higher fees than traditional ETFs.

The Social Security cost-of-living adjustment for 2026 is projected to be the lowest increase that millions of beneficiaries have seen in recent years.

This could change, however, due to potential inflationary pressures from tariffs. 

Recent estimates for the 2026 COLA, based latest government inflation data, place the adjustment to be around 2.2% to 2.3%, which are below the 2.5% increase that went into effect in 2025.

The COLA for 2026 may be 2.2%, estimates Mary Johnson, an independent Social Security and Medicare analyst. Meanwhile, the Senior Citizens League, a nonpartisan senior group, estimates next year’s adjustment could be 2.3%.

If either estimate were to go into effect, the COLA for 2026 would be the lowest increase since 2021, when beneficiaries saw a 1.3% increase.

As the Covid pandemic prompted inflation to rise, the Social Security cost-of-living adjustments rose to four-decade highs. In 2022, the COLA was 5.9%, followed by 8.7% in 2023 and 3.2% in 2024.

The 2.5% COLA for 2025, while the lowest in recent years, is closer to the 2.6% average for the annual benefit bumps over the past 20 years, according to the Senior Citizens League.

To be sure, the estimates for the 2026 COLA are indeed preliminary and subject to change, experts say.

The Social Security Administration determines the annual COLA based on third-quarter data for Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

New government inflation data released on Thursday shows the CPI-W has increased 2.2% over the past 12 months. As such, the 2.5% COLA is currently outpacing inflation.

Yet that may not last depending on whether the Trump administration’s plans for tariffs go into effect. Trump announced on Wednesday that tariff rates for many countries will be dropped to 10% for 90 days to allow more time for negotiations.

If the tariffs are implemented as planned, economists expect they will raise consumer prices, which may prompt a higher Social Security cost-of-living adjustment for 2026 than currently projected.

“We could see the effect of inflation in the coming months, and it could very well be by the third quarter,” Johnson said.

If that happens, the 2026 COLA could go up to 2.5% or higher, she said.

Retirees are already struggling with higher costs for day-to-day items like eggs, according to the Senior Citizens League. Meanwhile, new tariff policies may keep food prices high and increase the costs of prescription drugs, medical equipment and auto insurance, according to the senior group.

Most seniors do not feel Social Security’s annual cost-of-living adjustments keep up with the economic realities of the inflation they personally experience, the Senior Citizens League’s polls have found, according to Alex Moore, a statistician at the senior group.

“Seniors generally feel that that the inflation they experience is higher than the inflation reported by the CPI-W,” Moore said.

When costs are poised to go up and the economic outlook is uncertain, seniors may be more likely to feel financial stress because their resources are more fixed and stabilized, he said.

The impact of President Donald Trump’s tariff agenda and resulting trade war will translate to higher consumer prices by summer, economists said.

“I suspect by May — certainly by June, July — the inflation statistics will look pretty ugly,” said Mark Zandi, chief economist at Moody’s.

Tariffs are a tax on imports, paid by U.S. businesses. Importers pass on at least some of those higher costs to consumers, economists said.

While economists debate whether tariffs will be a one-time price shock or something more persistent, there’s little argument consumers’ wallets will take a hit.

Consumers will lose $4,400 of purchasing power in the “short run,” according to a Yale Budget Lab analysis of tariff policy announced through Wednesday. (It doesn’t specify a timeframe.)

In fact, in a “darkly ironic” way, the specter of a global trade war may have had a “positive” impact on inflation in March, Zandi said. Oil prices have throttled back amid fears of a global recession (and a resulting dip in oil demand), a dynamic that has filtered through to lower energy prices, he said.

“I think it’ll take some time for the inflationary shock to work its way into the system,” said Preston Caldwell, chief U.S. economist at Morningstar. “At first, [inflation data] might look better than it will be eventually.”

But consumers will start to see noticeably higher prices by May, if the president keeps tariff policy in place, said Thomas Ryan, an economist at Capital Economics.

“Price increases take time to filter through the supply chain (starting with producers, then retailers/wholesalers, and finally consumers),” Ryan wrote in an e-mail.

Capital Economics expects the consumer price index to peak around 4% in 2025, up from 2.4% in March. That peak would be roughly double what the Federal Reserve aims for over the long term.

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Most physical goods, such as vehicles, consumer electronics, clothing and furniture, are expected to be pricier by Memorial Day, Zandi said.

Additionally, retailers and wholesalers “won’t want to do this all at once,” Ryan said.

They’ll likely sprinkle in higher prices over time to blunt backlash from consumers, Ryan said. Consumer prices “will reflect more of the true impact of tariffs” in May and beyond, he said.

There’s also the possibility that some companies may try to front-run the impact of tariffs by raising prices now, in anticipation of higher costs, Ryan said.

It would be a gamble for companies to do that, though, Caldwell said.

“Any company that kind of sticks its neck out first and increases prices will probably be subject to political boycotts and unfavorable attention,” he said. “I think companies will move pretty slowly at first.”