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Treasury Yields Soar to November High Amid Hot CPI

As persistent inflation and a strong job market hint at delayed rate cuts by the Federal Reserve. Long-term government bond ETFs, including TLT and ZROZ, face declines.

Rony Abboud
By Rony Abboud · April 15, 2024
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Treasury Yields Soar

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Following the Federal Reserve's March meeting, a note of caution was evident, throwing light on the central bank's guarded outlook. Post-meeting discussions by several officials amplified concerns around sustained inflation and a robust job market, signaling potential delays in interest rate reductions that many had anticipated might commence early this year.

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Impact on Long-Term Government Bonds

This apprehensive sentiment around the inflation outlook and the job market's strength was further exacerbated by unexpected growth in U.S. manufacturing and March's CPI data, which exceeded expectations. With a 0.4% rise in March and an annual increase of 3.5%, the CPI's upward trajectory surpassed economists' anticipations of 0.3% and 3.4%, respectively. This hotter-than-expected inflation data prompted traders to scale back their speculations regarding an imminent easing cycle by the Federal Reserve.

As a result, the ripple effects were acutely felt in the realm of long-term government bond ETFs, which registered a notable slump last week. The iShares 20+ Year Treasury Bond ETF (

), boasting an AUM of $51.6 billion, experienced a decline of 1.19%. The situation was even grimmer for the PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (
ZROZ
-3.12%
), which saw a sharper decrease of 1.57%.

Group Data

Index Data

Funds Specific Data: TLT, VGLT, SPTL, TLH, EDV, ZROZ

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.

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