BlackRock’s iShares 20+ Year Treasury Bond ETF (TLT) tumbled to its lowest level since 2004 amid a historic Treasury rout, driven by sticky inflation and aggressive Fed rate hikes that have crushed demand for long-dated government debt.
The iShares 20+ Year Treasury Bond ETF (TLT) extended its decline to levels not seen since 2004 as a brutal Treasury selloff pushed long-term yields sharply higher. The ETF, often referred to as a ‘widow maker’ for its painful price swings, has been hammered by persistent inflation and expectations of further Fed rate increases.
Rising long-term Treasury yields, fueled by stubborn inflation and the Federal Reserve's aggressive rate-hiking cycle, pushed bond prices lower, dragging the ETF to multi-decade lows.
The trade — shorting long-term Treasuries — has been profitable in the current cycle, but timing the exit remains treacherous as historical reversals have been sharp.
With inflation still above the Fed's 2% target and further rate hikes likely, TLT may remain under pressure, though any economic slowdown could trigger a rally.
The plunge in the long-term Treasury ETF implies a surge in yields, with the 10-year Treasury yield likely revisiting multi-year highs. The selloff reflects market repricing of Fed policy and inflation expectations.
If the TLT ETF continues to slide, the 10-year yield could test levels above 5%, but much depends on upcoming inflation and labor market data.
The ETF tracks long-term Treasuries, so its decline signals rising yields across the curve, with the 10-year often moving in tandem.
BlackRock’s iShares 20+ Year Treasury Bond ETF (TLT) has collapsed to its lowest level since 2004 as a relentless Treasury selloff hammers long-dated bonds. The decline reflects stubbornly high inflation and a hawkish Federal Reserve that continues to drive yields higher. The ‘widow maker’ ETF, a popular vehicle for betting on long-term government debt, has now erased decades of price gains.
The ‘Widow Maker’ nickname refers to BlackRock’s iShares 20+ Year Treasury Bond ETF (TLT), a fund notorious for inflicting heavy losses on investors who bet on long-dated Treasuries only to see yields spike and prices crash.
Rising long-term Treasury yields, driven by persistent inflation above the Fed’s target and expectations of further rate hikes, have caused bond prices to plunge, dragging the ETF to a multi-decade low.
Bond investors in long-dated Treasuries have suffered significant capital losses, but higher yields also mean better income for new buyers. The outlook depends on whether inflation moderates and the Fed pivots.