Latest News

Market Extra: Bond ETFs fall ahead of expected Fed rate hike


Exchange-traded funds that focus on bonds were falling Tuesday as Federal Reserve officials gather for a two-day meeting that will conclude Wednesday with a widely anticipated announcement on its interest rate policy.

ETFs that invest in U.S. Treasury notes as well as investment-grade and junk bonds were trading down Tuesday afternoon, with investors bracing for a large rate hike by the Fed and clues on its future path of rate rises to battle soaring inflation. 

Shares of the iShares 20+ Year Treasury Bond ETF

were down around 0.7%, while the iShares iBoxx $ Investment Grade Corporate Bond ETF

fell about 0.8% and the iShares Boxx $ High Yield Corporate Bond ETF

dropped 0.7%, according to FactSet data, at last check.

Treasury yields have surged again in recent weeks as investors fear the Fed will keep up its aggressive pace of monetary tightening in an effort to bring stubbornly high inflation under control. Bond prices and yields move in opposite directions. 

The yield on the 10-year Treasury note

was up around 7 basis points at 3.55% Tuesday afternoon, FactSet data show, at last check. That’s after climbing Monday to its highest yield since April 12, 2011 based on 3 p.m. Eastern time levels, according to Dow Jones Market Data.

Read: Why rising Treasury yields are a drag on the stock market

Meanwhile, shares of iShares Core U.S. Aggregate Bond ETF

were down 0.4% Tuesday afternoon, while the iShares 7-10 Year Treasury Bond ETF

also fell 0.4% and the iShares 1-3 Year Treasury Bond

dipped less than 0.1%, FactSet data show, at last check.

Shares of the iShares TIPS Bond ETF
which provides exposure to Treasury inflation-protected securities, were also trading lower, down about 0.2%.

Read: This interest-rate-hedge ETF has soared 60% this year as stocks, bonds sink in market carnage

Bonds have taken a hit along with equities this year amid rising rates and the hottest inflation in decades. For example, the iShares 20+ Year Treasury Bond ETF has lost 26.6% in 2022 through Monday on a total return basis, while the iShares Core U.S. Aggregate Bond ETF had a 12.3% loss over the same period. 

Meanwhile, U.S. stocks were down Tuesday afternoon, with the S&P 500

falling 1.5% and the Dow Jones Industrial Average

down more than 400 points amid concern over rising rates and high inflation. The S&P 500 has tumbled 18% this year through Monday.

Read: Fearing a hawkish Fed? Here’s what’s likely limiting more downside in the stock market, according to JPMorgan’s Marko Kolanovic.

Financial Crime: ‘There is no innocent explanation’: Newly released FBI files reveal Ponzi schemer Bernie Madoff’s dramatic confession as agents arrested him

Previous article

3rd Look at Local Housing Markets in August

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News