ETF Investors Still Buying Up TLT Despite its Big Drop

Bond ETFs are dropping, but investors are still pouring money into the fund.

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sumit
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Senior ETF Analyst
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Reviewed by: Paul Curcio
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Edited by: Kiran Aditham

Bonds are getting hammered to start the new year as investors price in fewer rate cuts by the Federal Reserve and stronger economic growth.

The 30-year Treasury bond yield, for instance, is flirting with 5% for the first time since late 2023, and is up noticeably from the 4% level it traded at as recently as September.

BlackRock's iShares 20+ Year Treasury Bond ETF (TLT) has already lost 2% this year after dropping more than 8% in 2024. However, despite the decline, investors have still been scooping up the long-bond ETF.

Since the start of the year, TLT has seen inflows of $976 million, the sixth-most of all U.S.-listed exchange-traded funds.

The inflows suggest that some investors see value in long bonds with yields hovering at levels they haven’t often seen this decade.

30-Year Treasury Bond Yield Flirting With 5%

In 2023, when the Fed was hiking rates aggressively in response to sky-high inflation, the yield on the 30-year reached 5.1%, its richest level since 2007. But it remained above 5% for less than two weeks, falling to 4% just two months later.

Since then, the yield hovered near 4% on the low end and 4.8% on the high end—that is, until recently, when it broke out of that range and headed for the 2023 high.

Investors will now be eager to see whether yields will challenge or potentially even surpass those highs in the coming weeks and months.

A big catalyst could come at the end of the month, when the Federal Open Market Committee (FOMC) gathers to make its next monetary policy decision

A hawkish tone could cause traders to double down on bets of no Fed rate cuts this year, leading to further increases in Treasury bond yields.

On the other hand, a more balanced tone from the U.S. central bank could cause yields to retreat from their peaks, keeping the 2023 cycle highs intact.

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.

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