Latest news with #TLT
Yahoo
6 days ago
- Business
- Yahoo
TLT Falls Out of Favor as Yields Stabilize Near 5%
30-year Treasury yields hovered near 5% this week, holding close to their highest levels of the cycle. But unlike in 2023, when yields crossed the 5% threshold for the first time in 16 years, ETF investors aren't rushing to buy long-term bonds this time around. The iShares 20+ Year Treasury Bond ETF (TLT), once a go-to play for investors looking to bet on falling rates, has seen a sharp reversal in sentiment. So far in 2025, investors have pulled $2 billion from the fund, bringing its assets under management down to just over $47 billion. That puts TLT behind the iShares 0-3 Month Treasury Bond ETF (SGOV), which recently became the largest Treasury-only ETF in the United States. SGOV now boasts $51.3 billion in assets, reflecting a clear shift in investor preference toward the short end of the yield curve. TLT Demand Drops Off Part of the dropoff in TLT demand is simply due to normalization. In 2022 and 2023, when rates first surged past 4% and 5%, those levels were shocking after more than a decade of near-zero interest rates. But now, with yields holding steady at elevated levels for several years, investors have grown accustomed to this new environment. The initial appeal of 'locking in' high yields has faded. At the same time, long-term Treasurys still face significant headwinds. Inflation concerns remain elevated amid the Trump administration's new round of tariffs. Federal debt worries are mounting in the wake of the administration's recently passed tax and spending bill. And escalating trade tensions have raised questions about foreign demand for U.S. government bonds. Taken together, these risks have tempered enthusiasm for long-duration exposure. While a 5% yield is still attractive—especially if the economy weakens and rates decline—the risk/reward for long bonds looks more balanced today. There are still plenty of catalysts that could push yields even higher. SGOV Gains Traction That may explain why short-term Treasury ETFs like SGOV have been gaining traction. With near-zero interest rate risk, SGOV offers a current 30-day SEC yield of 4.22%, not far behind TLT's 4.92% yield but with much lower duration exposure. Of course, the dynamics could shift. If the Federal Reserve begins cutting rates aggressively, yields on short-term Treasurys will drop. In that scenario, TLT and other long-duration bond ETFs could regain favor as investors seek to lock in higher yields before they disappear. For now, however, investors prefer the safety and flexibility of T-bills over the volatility of long | © Copyright 2025 All rights reserved
Yahoo
14-07-2025
- Business
- Yahoo
TLT Slides as Fixed-Income Investors Brace for CPI Report
Long-term bond investors are on edge ahead of Tuesday's Consumer Price Index (CPI) reading, as the iShares 20+ Year Treasury Bond ETF (TLT) slipped two days in a row, reflecting growing concerns over upcoming inflation data. The cautious sentiment comes as markets brace for tomorrow's CPI release, which will reveal June's inflation data. TLT fell 0.5% midday, following Friday's 1.4% decline. The expectation for a higher inflation reading, largely pushed up by the bond market's concerns of tariff-induced price increases, is also driving Treasury yields higher, as yields move inversely to bond prices. The median forecast for June's CPI is a significant 2.7% increase, a notable acceleration from the previous month's 2.4% reading. This anticipated uptick reflects various pressures, with investors particularly keen to see if President Donald Trump's recently implemented "reciprocal tariffs" are beginning to ripple through to consumer prices. The tariffs, including a 10% baseline on nearly all imports and higher rates on goods from countries like China, are expected to raise import costs, which might be passed on to consumers and contribute to broader inflationary trends. Market participants will scrutinize the data for any specific categories showing unusual price hikes that could be linked to these new trade policies. Despite the widespread expectation for a higher CPI reading, a surprise to the downside remains a possibility. Consumer sentiment, as indicated by recent surveys, continues to hover at relatively low levels. This caution among consumers, combined with a potential slowing in overall demand as the economy digests higher interest rates and economic uncertainty, may keep prices in check more than anticipated. It's plausible that the market's fear of tariff-induced inflation might be overblown in the short term or that businesses are absorbing some of the costs rather than fully passing them on. Meanwhile, TLT's price is hovering near multi-year lows, reflecting that long-term Treasury yields—particularly the 10-year yield (currently at 4.44%) and the 30-year yield (at 4.99%)—are near multi-year highs as the bond market prices in persistent inflation. As we look ahead, the market fully expects the Federal Reserve to hold steady at its next Federal Open Market Committee (FOMC) policy decision meeting on July 25. The Fed has consistently emphasized its data-dependent approach and, while a higher CPI reading would reinforce their cautious stance, they are unlikely to react immediately with a rate hike. However, the Fed Funds futures market, which reflects trader expectations for future interest rates, currently gives a substantial 65% probability of a rate cut in September. This suggests that while near-term inflation is a concern, the market still believes the Fed will eventually need to ease monetary policy, likely in response to a slowing economy or sustained disinflationary trends emerging later in the year, despite the current inflationary pressures. The interplay between these immediate inflation concerns and the longer-term economic outlook will continue to drive market movements following tomorrow's crucial CPI release. Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risks, and investors should carefully consider their investment objectives and risk tolerance before making any investment decisions. At the time of publication, Kent Thune did not hold a position in any of the aforementioned | © Copyright 2025 All rights reserved Sign in to access your portfolio
Yahoo
09-07-2025
- Business
- Yahoo
BlackRock's Cash-Like ETF Eclipses Infamous Long-Bond Trade
(Bloomberg) -- To see how the 'T-bill-and-chill' mindset is reshaping fixed-income investing, look no further than the diverging fortunes of two BlackRock Inc. exchange-traded funds. Singer Akon's Failed Futuristic City in Senegal Ends Up a $1 Billion Resort Are Tourists Ruining Europe? How Locals Are Pushing Back Can Americans Just Stop Building New Highways? Denver City Hall Takes a Page From NASA Philadelphia Trash Piles Up as Garbage Workers' Strike Drags On The phrase captures a preference for short-term government debt in the aftermath of the Federal Reserve's most aggressive rate hiking cycle in decades — a strategy that delivers steady income without exposure to the monetary-driven whiplash of longer-maturity Treasuries. One fund has emerged as a haven for cautious cash holders. The other continues to fall out of favor. The iShares 0-3 Month Treasury Bond ETF — a five-year-old fund with the ticker SGOV — now manages over $50 billion in assets, more than the iShares 20+ Year Treasury Bond ETF, or TLT. Launched in 2002, the TLT fund — still the most traded bond ETF — had been popular among those seeking to bet aggressively on ups and downs of interest rate moves. The shift reflects how ETF investors are embracing short-term debt that offers reliable yield with minimal volatility, while stepping away from hard-to-price risks tied to the path of monetary policy years out. With the Federal Reserve holding rates steady and inflation still sticky, many are content to sit in cash and earn more than 4%. Over the past five years, SGOV has delivered modest but consistent gains, while TLT — despite drawing tens of billions in inflows — has lost roughly 40% in value, earning its reputation as the 'widow maker' of the ETF world. 'That preference for lower vol, stable income is growing,' said Todd Sohn, senior ETF strategist at Strategas. 'Many investors are now realizing the large amount of volatility that comes with being on the long-end of the curve.' BlackRock's cash-like ETF ranks among the top funds by inflows in 2025, and a similar fund from State Street Corp. hit a record in assets earlier this year. The allure of cash also helped boost money market fund assets to a record above $7 trillion. The tilt toward cash and short-term notes is partially driven by skepticism that long-duration bonds offer enough extra yields to justify the risks — from persistent inflation to growing concerns about the US' fiscal health. Thirty-year bonds tumbled on Tuesday, pushing yields toward 5% for the first time since May, after President Donald Trump signed a $3.4 trillion budget bill into law last week. Meanwhile, a stronger-than-expected jobs report has prompted traders to dial back expectations that the Fed will cut rates from the current range of 4.25%-4.5% soon. A full quarter-point reduction isn't completely priced in until in October. That means by hoarding cash, investors don't have to give up much on yields. SGOV has a yield of about 4.2%, compared with 4.9% in TLT. The volatility of the long-bond fund, however, amounted to levels similar to the S&P 500. 'The extra vol on TLT is just not worth it unless you have a massive pessimistic view on the economy and rates collapse,' Sohn said. BlackRock's Rick Rieder is among investors who are positioned for the yield curve to steepen, and said on Bloomberg Television's ETF IQ last week that there's more opportunity in the stock market at the moment than at the long-end of the Treasury curve. 'There's going to be a point where, gosh, we're going to want to own some duration: TLT allows you to supercharge that duration,' said Rieder. 'I just don't think we need it today.' --With assistance from Katie Greifeld. Will Trade War Make South India the Next Manufacturing Hub? 'Our Goal Is to Get Their Money': Inside a Firm Charged With Scamming Writers for Millions Pistachios Are Everywhere Right Now, Not Just in Dubai Chocolate 'Telecom Is the New Tequila': Behind the Celebrity Wireless Boom SNAP Cuts in Big Tax Bill Will Hit a Lot of Trump Voters Too ©2025 Bloomberg L.P. Inicia sesión para acceder a tu cartera de valores
Yahoo
07-07-2025
- Business
- Yahoo
SGOV: First Ultra-Short-Term Bond ETF to Surpass $50B in AUM
The iShares 0-3 Month Treasury Bond ETF (SGOV) has reached a major milestone, becoming the first ultra-short-term bond ETF to eclipse $50 billion in assets under management. SGOV now holds $50.3 billion in AUM after pulling in $20.5 billion of inflows year to date, the second-highest total of any U.S.-listed ETF in 2025. That makes SGOV the fifth-largest fixed-income ETF overall, behind only the Vanguard Total Bond Market ETF (BND), the iShares Core U.S. Aggregate Bond ETF (AGG), the Vanguard Total International Bond ETF (BNDX) and the Vanguard Intermediate-Term Corporate Bond ETF (VCIT), which have between $54.5 billion and $130.8 billion in assets. SGOV has also leapfrogged the iShares 20+ Year Treasury Bond ETF (TLT), which currently has $47.6 billion in AUM. While SGOV focuses on the shortest end of the Treasury curve, TLT is positioned at the other extreme, holding long-dated U.S. government bonds and carrying significant interest-rate sensitivity. TLT saw a surge of popularity in 2023 and early 2024, with assets peaking at $64.5 billion as investors bet on falling interest rates following the fastest Fed hiking cycle in decades. But with rates remaining elevated, appetite for long-duration exposure has faded. TLT has seen $2.9 billion in outflows so far this year. SGOV isn't alone in benefiting from investors' growing preference for cash-like ETFs with minimal duration risk. The SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) has also attracted $5.8 billion in inflows year to date and now holds $41.9 billion. However, BIL has fallen behind SGOV in the ultra-short-term category after leading earlier this year. Its AUM has dropped from a peak of $49.6 billion due to significant outflows in recent months. The reason could have to do with cost and performance. BIL has a higher expense ratio than SGOV (0.14% vs. 0.09%) and, since SGOV's launch in May 2020, it has outperformed BIL by 78 basis points (14.97% vs. 14.19%). With investors still wary of interest-rate volatility and content to park cash in short-term vehicles, SGOV's rapid rise may not be over | © Copyright 2025 All rights reserved Sign in to access your portfolio
Yahoo
24-06-2025
- Business
- Yahoo
TLT, Bond ETFs Are Top Performers Amid Iran Conflict
Bond ETFs surged Monday as concerns faded over Iran potentially blocking the Strait of Hormuz in response to U.S. airstrikes on Sunday. The iShares 20+ Year Treasury Bond ETF (TLT), a widely followed proxy for long-duration U.S. Treasurys, jumped as much as 1% in midday trading as yields fell across the curve. Adding to the bond market's strength were dovish signals from the Federal Reserve. Speaking at a central banking conference in Prague, Fed Governor Michelle Bowman said, 'Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting.' Her comments echoed remarks made Friday by Fed Governor Christopher Waller, who acknowledged progress in bringing inflation down. Traders took notice. Fed Funds Futures markets now reflect a greater than 20% probability of a rate cut in July, which is the first time that threshold has been crossed in a month, and a more than 60% chance of a September cut, up sharply from 47% just one month ago. While gold, particularly the $103 billion SPDR Gold Shares (GLD), has traditionally been a go-to safe haven during geopolitical flare-ups, last week's price action suggests a shift in investor psychology. As Treasury yields dropped, TLT posted gains while gold's price declined, signaling that investors are increasingly more concerned about slowing economic growth than inflation. The reason? Though tensions in the Middle East have flared, including fresh worries over Iran's response to U.S. military activity, the lack of disruption to oil transport through the Strait of Hormuz calmed fears of an immediate inflationary spike. Instead, with economic data softening and global manufacturing indicators turning lower, recession concerns are regaining prominence. This has pushed more investors into long-dated Treasury ETFs like TLT, which benefit when yields fall. Unlike gold, which thrives in inflationary or crisis conditions, Treasurys gain favor when growth slows and rate cuts become more likely, exactly the narrative markets seem to be pricing in. If 2025 has proven anything, it's that diversification is back in fashion, and it's paying off. For the first time in three years, a blend of asset classes, including bonds, international equities and commodities, has outperformed a purely U.S. stock-focused portfolio. This year's best-performing diversified strategies include: Long-term Treasury ETFs, like TLT, benefiting from shifting rate expectations Ultra-short-term Treasury ETFs, such as the iShares 0-3 Month Treasury Bond ETF (SGOV) and the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), offering attractive yields with lower duration risk Precious metals funds, like GLD, the iShares Silver Trust ETF (SLV) and the abrdn Physical Platinum Shares ETF (PPLT), offering both inflation protection and geopolitical hedging International stock ETFs, especially those concentrated in defense areas like the Select STOXX Europe Aerospace & Defense ETF (EUAD), buoyed by more attractive valuations, geopolitical tensions and a weakening U.S. dollar As markets navigate a murky outlook filled with stagflation risks, global trade friction and ongoing geopolitical tensions, maintaining exposure to multiple uncorrelated asset classes may be essential. The outperformance of diversified portfolios in 2025 may serve as a blueprint for disciplined investors heading into 2026, where the only constant may be uncertainty. For investors looking ahead, the takeaway may be simple: Don't bet on a single outcome. Instead, build a portfolio that can weather many. Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risks, and investors should carefully consider their investment objectives and risk tolerance before making any investment decisions. At the time of publication, Kent Thune held a long position in | © Copyright 2025 All rights reserved
