Respite as Long-Dated Treasury Yields Decline

After a period of gut-wrenching market volatility that saw 10-year treasury yields peak just above 5% – their highest level since July 2007 - long-dated Treasuries stabilized somewhat this week. 

Government Bond ETFs were notably affected by the uptick, losing almost 5% over the past week and giving investors cause for concern. Amidst these troubled waters, however, signs of respite have emerged. This week saw U.S. 10-year treasury yields moderate – dropping to 4.84% from 4.93%, a fall of nine basis points.

This "inverse trend" extended beyond American borders and into Europe as well. The German Bund and French OAT also experienced diminished pressure with their respective ten-year yields falling by 6 basis points.

As these pressures eased off, positive results were inevitably reflected in the performance of long-term Government Bond ETFs. Collectively, funds within the segment managed to claw back ground with an average performance of 1.39% over the week, while individual funds illustrate this recovery pattern more prominently.

The Vanguard Extended Duration Treasury ETF (EDV), having suffered a 7.42% loss the previous week, was able to offset a portion of that loss with gains of 2.02% this week. Similarly, the PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ) maintained an upward trajectory over the week, climbing close to 1.90% - a sharp contrast to the previous week’s hefty drop in performance of over 8%.