The iShares 20+ Year Treasury Bond ETF (TLT) continued its decline on Wednesday, reaching another round of 16-year lows as U.S. Treasurys faced renewed selling pressure.
TLT Hits Lowest Level Since July 9, 2007
TLT, which is the market’s largest bond fund and serves as a bellwether for other bond ETFs, fell nearly 1% on Wednesday. It is currently on track to settle at its lowest level since July 9, 2007, according to Dow Jones Market Data.
AGG Also Experiences Decline
The iShares Core U.S. Aggregate Bond ETF (AGG), which tracks the widely followed U.S. Bloomberg Aggregate Bond Index, the primary gauge for investment-grade bonds, dropped 0.3%. It is expected to close at its lowest level since October 13, 2008.
Drop in Other Treasury Bond ETFs
The iShares 7-10 Year Treasury Bond ETF (IEF) and the iShares 10-20 Year Treasury Bond ETF (TLH) are also experiencing levels not seen since April 2010 and January 2007, respectively, according to Dow Jones Market Data.
Temporary Rebound Followed Bond-Market Rout
Earlier this month, TLT reached its lowest point since August 2007. However, the fund rebounded as the bond-market rout subsided after a “flight-to-safety” trade triggered by the conflict between Israel and Hamas. This led to a jump in long-term bond prices and a decline in yields.
Resumption of Long-Term Bond Selloff
The long-term bond selloff resumed following the release of a stronger-than-expected September retail sales report. This report revealed the unexpected resilience of the U.S. economy and reignited fears of “higher-for-longer” interest rates.
Treasury Yields Remain Higher
Both the 10-year and 30-year Treasury yields (BX:TMUBMUSD10Y and BX:TMUBMUSD30Y) remained higher on Wednesday, although the 30-year rate pulled back from above 5% after a strong 20-year auction in the afternoon. It’s important to note that yields and debt prices move in opposite directions.
Decline in U.S. Stocks
U.S. stocks also experienced a decline on Wednesday. The Dow Jones Industrial Average (DJIA) was down over 150 points or 0.5% at 33,843, while the S&P 500 (SPX) and the Nasdaq Composite (COMP) declined by 0.8% and 1.1%, respectively.
