Treasury yields climbed higher again on Monday morning, continuing the topside push they saw after Friday’s explosive jobs report. As yields march upward, exchange traded funds exposed to the Treasury market have stepped lower.
The recent surge in yields came after Friday's data showed a larger-than-expected increase in employment growth, with the economy adding 517K jobs during January. The figures suggested that the job market remains strong regardless of the Federal Reserve's sharp increase in interest rates over the past year.
Early into Monday’s session, the U.S. 10 Year Treasury yield ( US10Y ) moved higher by 8 basis points to 3.61%. The push followed a Friday jump of 14 basis points.
At the same time, the U.S. 2 Year Treasury yield ( US2Y ) rose by 11 basis points on Monday to 4.41%, which now is above the instruments 100-day moving average. The rise on the 2-year follows Friday’s pop higher of 20 basis points.
The rise in yields puts pressure on Treasury-related ETFs. This comes as yields and bond prices move in opposite directions. Therefore, the increase in yields has in turned pushed bond prices down, weighing on ETFs tied to fixed-income prices.
Here is a list of Treasury-based exchange traded funds that have suffered on both Friday and Monday: ( NASDAQ: TLT ), ( NASDAQ: IEI ), ( IEF ), ( SHY ), ( GOVT ), ( VGSH ), ( VGIT ), ( SCHO ), ( SCHR ), ( SPTL ), ( TLH ), and ( VGLT ).
Outside of Treasury funds, other large operating bond ETFs like the Vanguard Total Bond Market ETF ( NASDAQ: BND ) and the iShares Core U.S. Aggregate Bond ETF ( NYSEARCA: AGG ), have moved. These cumulatively manage more than $175B in assets have also faltered.
In broader financial news, major market averages have traded lower on Monday, continuing the slide seen after the January payroll data.
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Treasury ETFs slide as yields spike after explosive payrolls report