Bond ETFs: Winds of Change Begin To Swirl
08 October 2009 at 3:16 pm by Gary Gordon
On 10/8/09, something was lost in the excitement of a deteriorating U.S. dollar and a profitable Alcoa. Specifically, auction participants balked at the issuance of new 30-year U.S. Treasury Bonds at 4.0%.
(In truth, I am surprised that investors would want 30-years at 5.0%. After all, it’s near impossible to believe that long maturity date treasuries can be kept at rock bottom lows for much longer.)
Here’s the most striking part. Interest in shorting U.S. Treasury Bonds MORE THAN DOUBLED on the news. Volume on the ProShares UltraShort 20+ U.S. Treasury (TBT) traded in excess of 12,500,000 shares, far exceeding the 5-6 million that one expects.
There are only a handful of times in TBT’s history that volume was this heavy. On most of those occasions… U.S. government bonds sailed in a new direction.
How will other bonds be affected? If today is any indication, U.S. investment-grade bonds may also struggle. However, as long as the U.S. dollar is falling, foreign bonds keep shining.
| Popular Bond ETFs During An Unpopular Auction For 30-Year U.S. Treasuries | ||||||
| 10/8/2009 | ||||||
| ProShares UltraShort 20+ U.S. Treasuries (TBT) | 2.18% | |||||
| Templeton Global Income (GIM) | 1.28% | |||||
| ProShares UltraShort 7-10 U.S. Treasuries (PST) | 0.84% | |||||
| SPDR International Treasury (BWX) | 0.83% | |||||
| iShares JP Morgan Emerging Market Bond (EMB) | 0.37% | |||||
| iShares Aggregate Bond (AGG) | -0.07% | |||||
| iShares TIPS Bond (TIP) | -0.10% | |||||
| iShares 7-10 U.S. Treasury Bond (IEF) | -0.37% | |||||
| iShares Investment Grade Bond (LQD) | -0.56% | |||||
| iShares 20+ U.S. Treasury Bond (TLT) | -1.05% | |||||
If you’d like to learn more about ETF investing… then tune into “In the Money With Gary Gordon.” You can listen to the show “LIVE”, via podcast or on your iPod.
Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.
Tags | "etf bond", "etf foreign bonds", "etf short bond", "etfs bonds", "etfs short bonds"
