Bonds Take A Hit As Long Treasury Yields Rise To 4-Month High

Published Fri, 23 Oct 2020 01:56:19 -0400 on Seeking Alpha

Seeking AlphaFinancial Advisor | Economy | Market OutlookBonds Take A Hit As Long Treasury Yields Rise To 4-Month HighOct. 23, 2020 1:56 AM ET|| Includes: FLRN, IEF, IEI, JNK, SHV, SHY, SJNK, STIP, TIP, TLH, TLT, VCIT, VCLT, VCSHby: James PicernoJames Picerno Macro, economy, Long OnlySummaryBond bears have a new reason to hope as rising yields weigh on long Treasury prices, which have fallen below a key technical support level.
Over the past week, long maturities for US government bonds led a broad decline in fixed income, based on a set of ETF proxies through October 21.
The iShares 20+ Year Treasury Bond ETF has tumbled for five straight days.
Betting against long-term bonds has been a losing strategy for several decades, and this form of contrarian pain has been especially deep in the past two years. It's debatable if it's different this time, but bond bears have a new reason to hope as rising yields weigh on long Treasury prices, which have fallen below a key technical support level.
Over the past week, long maturities for US government bonds led a broad decline in fixed income, based on a set of ETF proxies through October 21. The iShares 20+ Year Treasury Bond ETF (TLT) has tumbled for five straight days, leaving the ETF below its 200-day moving average for the first time in nearly two years.

Bond funds generally have followed suit in recent days, albeit in varying degrees. The shorter-maturity footprint via the iShares 7-10 Year Treasury Bond ETF (IEF), for example, slipped to a four-month low yesterday, although it remains moderately above its 200-day average.
For the year-to-date window, longer is still better for trailing returns so far in 2020. But a new round of bearish questions are weighing on the bond market's outlook.

Notably, the benchmark 10-year yield is reflecting an upside bias when compared with several moving averages. For example, for the first time this year, the 10-year rate's 50-day average has ticked above the... Read more