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Treasury ETFs Absorb Weekly Loss After Job Report Beats Forecast


ETFs that invest in U.S. Treasury bonds were among the worst performing funds this week due to a sharp sell-off Friday after the April nonfarm payrolls report surprised to the upside.

PIMCO 25+ Year Zero Coupon U.S. Treasury Index (ZROZ), Vanguard Extended Duration Treasury Index (EDV) and iShares Barclays 20+ Year Treasury Bond Fund (TLT) were all down more than 2% on Friday.

“This nonfarm payroll number establishes a floor under Treasury yields,” said Donald Ellenberger at Federated Investors in a Bloomberg report. “The Fed continues to have its foot on the accelerator. That will keep a lid on how high Treasury yields can go. At the same time, this was a pretty decent payroll number, so that’s likely to put a floor on how low yields can go.”

In stocks, the S&P 500 traded above 1,600 for the first time and the Dow Jones Industrial Average cleared 15,000 at one point Friday. [VIX ETFs Drop on Nonfarm Payrolls]

For the week, the S&P 500 was on track for a weekly advance of 2%, the Dow rose 1.7% and the Nasdaq Composite added 3%.

The top three unleveraged ETFs this week were Teucrium Corn Fund (CORN), SPDR Oil & Gas Equipment & Services (XES) and iShares MSCI Russia (ERUS) with rallies of more than 5%.

The bottom three unleveraged ETFs this week were U.S. Natural Gas Fund (UNG), Active Bear ETF (HDGE) and ProShares Short QQQ (PSQ) with setbacks of 3% or more.

Next week’s calendar for economic data is light. Look for reports on job openings, consumer credit and the Treasury budget.  Federal Reserve Chairman Ben Bernanke is scheduled to speak on Friday.

iShares Barclays 20+ Year Treasury Bond Fund


Full disclosure: Tom Lydon’s clients own TLT.