A $ 15 Billion Treasury ETF Falls 20% From Peak As Yields Rise – tech2.org

A $ 15 Billion Treasury ETF Falls 20% From Peak As Yields Rise


By one measure, the decade-long bond bull market is over.

The $ 15 billion iShares 20+ Year Treasury Bond (TLT) ETF, an exchange-traded fund for longer-term government bonds, fell for a second day on Friday, losing as much as 2.3%. That extended its decline from an August peak to 20%, meeting a common definition of a bear market.

The Treasury’s defeat accelerated in recent weeks as vaccines and government stimulus fueled bets on an economic recovery and inflation, and yields rose to pre-pandemic levels. The rates on the 10-year Treasury notes are at 1.63%, the highest since February last year. Long-duration bonds have been hit the hardest, and 30-year Treasuries have suffered their fourth worst start to the year in the past century, Bank of America data shows.

“We believe 2020 marked the secular low for inflation and interest rates,” BofA strategists led by Michael Hartnett wrote in a note to clients. “The bull market for 40-year bonds is over.”

IShares 20+ Year Treasury ETF Down 20% From Peak

Investors are taking notice. They pulled $ 15.4 billion from bond funds in the week through March 10, the largest withdrawal in a year, according to data from BofA and EPFR Global.

With rates still historically low, more losses are possible for bond investors, according to Michael Reynolds, Glenmede’s chief investment officer.

“We are very cautious about the downside risk of the fixed income portion of our clients’ portfolios,” he said. “And that’s particularly why we are underweight basic bonds right now.”

– With the assistance of Vildana Hajric

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