Exchange traded funds tied to the price action of Treasury yields are pushed lower as yields climb ahead of the Federal Reserve’s rate decision that is scheduled for later this week.
The U.S. 10-year Treasury yield ( US10Y ) has moved up 5 basis points early on to 3.50%, marking its highest point since April of 2011. On the other hand, the U.S. 2-year Treasury yield ( US2Y ) jumped up by 10 basis points to 3.95%. The 2-year now sits just 5 basis points away from 4.00%, a level not seen since October of 2007.
In the bond market, yields and prices move in differing directions from one another. Therefore, as yields continue to climb, added pressure is placed on related bond funds.
Two ETFs in particular that have slumped on Monday are the iShares Core U.S. Aggregate Bond ETF ( NYSEARCA: AGG ), and the Vanguard Total Bond Market ETF ( NASDAQ: BND ).
AGG with its $81.35B assets under management has fallen 0.3% , while BND with its slightly higher $82.01B assets under management declined by 0.2% .
Other related Treasury ETFs that have been affected by a rise in yields include: ( NASDAQ: TLT ), ( NASDAQ: IEI ), ( IEF ), ( SHY ), ( GOVT ), ( SHV ), ( BIL ), ( VGSH ), ( VGIT ), ( SCHO ), ( SCHR ), ( SPTL ), ( TLH ), and ( VGLT ).
In related Treasury yield news, the yield curve inversion spread between the U.S. 30-year Treasury yield ( US30Y ) and the U.S. 5-year Treasury yield ( US5Y ) trades near its widest point since 2000.
For further details see:
Treasury ETFs slide as the U.S. 10Y hits highest level since 2011