iShares 10-20 Year Treasury Bond ETF
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Castleark Management LLC raised its holdings in shares of iShares 10-20 Year Treasury Bond ETF (NYSEARCA:TLH) by 19.9% during the second quarter, according to its most recent filing with the Securities and Exchange Commission (SEC). The firm owned 258,432 shares of the company's stock after acquiring an additional 42,840 shares during the
iShares 10-20 Year Treasury Bond ETF faces limited upside as long-term rates may remain elevated due to structural inflation and dollar concerns. TLH's high duration makes it sensitive to Fed rate decisions as well, but there are calls by Fed officials to slow down cuts, and there weren't signs of disinflation lately. There's also the more remote benchmarking risk associated with possible mandate changes one day and the fact that corporates may be more creditworthy than the US government.
iShares 10-20 Year Treasury Bond offers an attractive balance between yield and duration. Despite trade war fears and rising inflation, TLH's real yield remains competitive. It's a contradiction, but tariff escalation could actually boost demand for Treasuries like TLH, as the USD becomes a safe haven and fiscal revenues rise.
We've identified numerous key rates between the 10 and 20 year region as compelling, despite interim supply/demand imbalances remaining. The iShares 10-20 Year Treasury Bond ETF isolates that part of the curve with a weighted average maturity of 17.11 years and an effective duration of 12.21 years. Our estimate aligns with a slower economy, inconsistent monetary policy, and exacerbated credit risk. Combined we see lower 10-20 year yields unfolding in due course.
In recent days, a new headwind is weighing on fixed income securities: a US government budget bill, which is expected to significantly raise an already hefty federal deficit in the years ahead. Long-term Treasuries are the biggest losers post-Liberation Day, based on a set of ETFs through yesterday's close (May 21).
Market volatility presents both risks and opportunities, emphasizing the importance of timing over price action for successful trading and investing. Pair trades with sound financial logic, like long treasuries and short corporate fixed-rate perpetuities, can capitalize in times of distress. The recently opened pair trade in iShares 10-20 Year Treasury Bond ETF and Invesco Preferred ETF generated significant profits due to credit spread widening.
U.S. fixed income ETFs garnered strong flows in February, uncovering insights into investor behavior and risk appetite in 2025. The $1.6 trillion U.S. fixed income ETF segment took in $31 billion in net flows in February, bringing year-to-date flows to $59 billion as of the end of the month.
TLH: This Treasury Market Discrepancy Will Make You Reevaluate Its Potential
The iShares 10-20 Year Treasury Bond ETF (TLH) is a high duration exposure, making it sensitive to changes in expectations and actualities around benchmark yields. Rising oil prices from recent weaker levels on strong demand data and potential geopolitical conflicts could limit rate cuts, which is bad for duration bets. Strong wage growth and payroll data and high inflation expectations in consumer surveys reflect underlying inflation that may otherwise be above policy targets without the help of commodity deflation.
TLH invests in mid to long-term U.S. treasuries and benefits from a declining inflation environment, which supports a buy rating. Inflation has cooled from 9.1% in June 2022 to 2.4% in August 2024, opening the door for Federal Reserve rate cuts. A potential economic recession could further accelerate rate cuts, boosting TLH's fund price and resulting in significant capital appreciation.
Expectations of Fed rate cuts have been rising lately due to continued signs of cooling inflation.
The latest inflation data signals confirmed bets that the Fed will cut rates next week, pushing Treasury ETFs to new highs.
Inflation and interest rates are remaining high. Inflation is not really going down, and inflation expectations are going to make the figure resistant to decline. We aren't even seeing unemployment kick in to pressure inflation rates given current rates.
It generally takes a few years for changes in Federal Reserve rates to fully impact bond fund dividends. Bond funds are still benefitting from prior rate hikes. Perhaps by enough to cancel out any future rate cuts. By my estimations, and under current Fed guidance, most bond funds would only start to see declining dividends in 2025, at the earliest.
With an inverted yield curve and a lackluster start for the year for stocks, it is a good time to check whether we are swimming naked. The article provides a simple clear-cut explanation of the bond market and bonds. Long-term bonds might be risky for some, while short-term bonds might not capture the true opportunity of having an inverted yield curve.
The iShares 20+ Year Treasury Bond ETF continued to decline on Wednesday, dropping to another round of 16-year lows as U.S. Treasurys saw renewed selling.
The TLH is a duration bet that may not be favorable in the current interest rate environment. We believe higher rates will be needed in 2024 and even 2025, in order to impact inflation through the corporate channel. The impact of higher rates on consumers has been limited, but businesses and corporate earnings will drive recessionary pressures more through restructuring efforts and lower employment.
Long-term bonds look appealing to Wells Fargo Investment Institute after they were hurt by a surge in yields.
Exchange-traded funds that invest in long-term Treasury bonds are dropping Thursday, as yields continued their march higher in the wake of the Federal Reserve's meeting on monetary policy.
Fixed-income investors looking for interest rate cuts from the Federal Reserve are still waiting, but that hasn't stopped low-rated bonds from posting strong gains in 2023. Bond investors hoping for encouraging signals from the Federal Reserve that its policy of raising interest rates was ending received mixed news yesterday.