118.81 -0.14 (-0.12%)
Pre-Market: 7:18AM EDT
|Bid||118.60 x 600|
|Ask||118.76 x 1500|
|Day's Range||118.83 - 119.22|
|52 Week Range||116.51 - 129.57|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.15%|
Mar.13 -- Alan Knuckman, chief market strategist at Agora Financial, discusses markets and his options strategy for the TLT with Julie Hyman on "Bloomberg Markets."
Monday's stock rout is about more than the much-discussed hit to Facebook (FB) that's spread through the technology sector. The dog that isn't barking once again is the bond market. The Treasury benchmark 10-year note was basically unchanged, holding at a yield of 2.848%, while the iShares 20+ Year Treasury Bond ETF (TLT) is actually 0.25% lower in price.
The US bond markets moved marginally higher in the previous week as investors’ worry about rising bond yields fell after the February inflation print showed stable growth. The Vanguard Total Bond Market (BND) ETF, which tracks the performance of the bond markets, ended the previous week at 79.5, appreciating by 0.26% for the week ending March 16.
Investors could stash their cash in the following ETFs that offer stability or even profit as trade war threats keep everyone on their toes.
The US bond markets (BND) have been struggling since the beginning of the year, as investors realized the Fed could increase rates faster when inflation started to increase. Bond yields across the board shot up, changing the narrative about the US yield curve from flattening to steepening. This week’s inflation report reduced those fears as inflation was reported to have increased by 0.2% in February, in line with market expectations and thus resulting in a sharp decline in bond yields as soon as the report was published.
Exchange-traded funds that track U.S. Treasurys have struggled thus far in 2018, with investors retreating from the sector—particularly bonds with longer durations—as fears over inflation and higher rates ...
The US bond markets were the only asset class that failed to rally after the February jobs report was released on March 9, 2018. The bond market, however, suffered further losses as every other segment of the jobs report pointed to a strong employment market, leaving the bias tilted toward further rate hikes. Rising rates are negative for the bond market, and investors holding these bonds tend to lose their asset value.
One portfolio manager recommends fixed-income investors look to high-grade bonds over high-yield in a rising rate environment.
The markets have not seen a serious decline in bond prices for some time and I don’t think investors are fashioning this change into their market strategies at the current time.
Financial markets have witnessed an abrupt change in their approach to bond markets over the past two months. Up until the end of 2017, markets were not convinced that inflation could rise according to the Fed’s expectations, and so long-term rates (TLT) did not rise in tandem with short-term rates (SHY), leading the yield curve to flatten. Then the employment report for January indicated that worker wages had increased more than expected, which allowed the chance for inflation to rise.
The US Federal Reserve has accumulated huge quantities of fixed-income (BND) securities as part of its three quantitative easing programs, QEs 1, 2, and 3. The balance sheet cuts should remain the same at 60% for Treasury securities (TLT) and 40% of mortgage-backed securities (MBB). Over the last decade, the US government was able to borrow at ultra-low interest rates, and the Fed was one of the biggest buyers.
Bond markets across the developed world have enjoyed a three-decade bull run that began in the early 1980s. The increasing demand for fixed income (BND) investments has pushed bond prices higher and yields lower, but investors have continued to pour money into bond markets because bonds were known to help balance portfolio risk. Now, with global economies picking up the pace, interest rates are bound to increase—at least, in the short-term—until they reach normal levels.