October is kicking off with a renewed bond-market rout, pushing up yields and putting a popular fixed-income ETF on track for its lowest close since the early days of the 2007-2009 financial crisis.
The iShares 20+ Year Bond ETF TLT, widely known by its “TLT” ticker, dropped 1.7% to $87.13 a share Monday afternoon, on track for its lowest close since Aug. 20, 2007, according to Dow Jones Market Data. The ETF has dropped around 13% so far this year. The ETF had dropped last week to its lowest since 2008, but then saw a respite as Treasurys bounced ahead of the weekend as worries mounted over the possibility of a U.S. government shutdown.
But a stopgap funding bill, approved by lawmakers on Saturday, averted a shutdown, leaving investors to return their focus to expectations the Federal Reserve will keep rates elevated for a lengthy period — and may be forced to further tighten policy — in its effort to bring down inflation.The yield on the 10-year Treasury note BX:TMUBMUSD10Y jumped more than 10 points to trade above 4.67%, after trading at its highest since October 2007.
Similarly, the closely followed iShares Core U.S. Aggregate Bond ETF AGG was under further selling pressure on Monday, heading for its lowest close since 2008. It tracks the closely followed U.S. Bloomberg Aggregate Bond Index, the main gauge of performance for investment-grade bonds. It also is the index all fixed-income investors strive to beat each year.