Treasury Yields Rise on Waning Rate-Cut Bets Amid Sticky Inflation

Inflation and Interest Rate Expectations

Recent data showing a surprise uptick in the core Personal Consumption Expenditures (PCE) for Q1 to an annualized 3.7%, against a 3.4% forecast, has stirred the pot. This higher-than-anticipated inflation reading has caused traders to recalibrate their expectations, pushing the timeline for a potential rate cut to December, a marked departure from earlier anticipations of three rate cuts this year.

The ETF Perspective

This shift in interest rate outlook and the persistent rise in Treasury yields have had noticeable repercussions on long-term Treasury ETFs. Overall, this asset class suffered a setback, witnessing a 0.94% drop over the week. Vanguard Extended Duration Treasury ETF (

) and the Vanguard Long-Term Government Bond ETF (

VGLT

-0.02%

) were particularly affected by these developments, with respective declines of 1.55% and 0.84%, bringing their year-to-date performance towards a two-digit loss.

Group Data

Index Data

Funds Specific Data:

TLT

-0.01%

,

VGLT

-0.02%

,

SPTL

-0.04%

,

EDV

+0.05%

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.