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Treasury Surge Boosts $22 Billion Fund to Record Two-Decade High

Katherine Greifeld

(Bloomberg) -- The fear-driven rush into Treasuries pushed one of the world’s most-popular bond ETFs to a record high.

BlackRock Inc.’s $22 billion iShares 20+ Year Treasury Bond fund, ticker TLT, rallied 5.2% on Friday as investors plowed into U.S. debt. That was the fund’s biggest jump and highest level since its start in July 2002.

Deepening concerns over the outbreak’s rapid spread and the potential economic impact kicked off a wave of haven buying to end the week. Rates on 10-year Treasuries plummeted to record lows, while risk assets shuddered. With yields below 1% on every tenor except the 30-year bond, investors are likely looking for “the most bang for their buck,” according to Lisa Hornby at Schroders.

“This is just a panicked market situation, so you want the most duration you can get,” said Hornby, a multi-sector fixed-income portfolio manager. “People don’t want to go home with risk over the weekend.”

The number of coronavirus cases globally approached 100,000. Yields on benchmark U.S. debt slid as low as 0.66% on Friday, while rates on 30-year bonds fell to an all-time low.

While liquidity concerns reigned in cash markets, volume in TLT spiked.Roughly 76 million worth of shares changed hands by 4:45 pm on Friday in New York, compared with an average of 16 million over the past 20 days.

The same fear buoying Treasuries is roiling the credit market amid an increasing threat to corporate cash flows. A derivatives index used to hedge against losses surged by the most since at least 2011 at one point Friday.

BlackRock’s $15.5 billion iShares iBoxx High Yield Corporate Bond ETF, ticker HYG, tumbled to the lowest since June.

“Credit markets were very close to cycle tights at the beginning of the year,” Hornby said. “Markets are just starting to look at the fact that we were perhaps way too tight given the potential risks out there.”

--With assistance from Tom Lagerman.

To contact the reporter on this story: Katherine Greifeld in New York at kgreifeld@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Rita Nazareth, Rachel Evans

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