Bond ETFs Smacked, Energy Jumps on Travel Outlook
Political and economic concerns weighed on bond markets.
- • LIVE COVERAGE
Political and economic concerns weighed on bond markets.
Big bond ETFs slipped today as yields rose while investors weighed a range of political and economic factors in a shortened trading week.
The iShares Core U.S. Aggregate Bond ETF (AGG), which tracks a universe of debt from Treasuries to investment-grade corporates, closed 0.5% lower. The rate-sensitive bond proxy, iShares 20+ Year Treasury Bond ETF (TLT), lost 1.7% and the Vanguard Total Bond Market ETF (BND) shed 0.5%.
The yield on the 10-year note rose 0.07%. Rates were at their highest point in three weeks, according to MarketWatch, as Donald Trump's reelection effort was boosted by a U.S. Supreme Court ruling that he enjoys broad immunity and undercuts attempts to prosecute him for subverting the 2020 election.
Worries about growing deficits and inflation also weighed on bond prices.
Meanwhile broad stock indexes rose. The Vanguard S&P 500 ETF (VOO) added 0.2% while the Nasdaq tracking Fidelity NASDAQ Composite Index ETF (ONEQ) rose 0.6%.
Meanwhile, energy commodities gained on an outlook for higher travel and as crude oil rig counts declined. The United States Oil Fund LP (USO) added 2.5%. Natural gas was the exception as measured by the 4.9% drop in the United States Natural Gas Fund LP (UNG).
Spot bitcoin ETFs surged, with the Fidelity Wise Origin Bitcoin Fund (FBTC) jumping 5.4%.
Treasury Yields Spike, Sending Rate-Sensitive Bond ETFs Lower
The rate-sensitive bond proxy, iShares 20+ Year Treasury Bond ETF (TLT) was down 2% in midday trading as investors appear concerned over a slew of economic reports due this week while the presidential election looms larger.

While the last two months of inflation data, led by the Consumer Price Index (CPI) and the Personal Consumption Expenditures Price Index (PCE), revealed cooler inflation, this week's data, led by Fed minutes, ISM manufacturing, the Job Openings and Labor Turnover Survey (JOLTS) and ADP employment data, may not support falling inflation.
This full slate of economic data comes even as U.S. markets will have shortened trading hours on July 3rd and will be closed on July 4th. Throw French and UK elections into the mix and investors have plenty of concerns to monitor this week.
The Wall Street Journal also reported that analysts are attributing at least some of the spike in yields to potential fiscal implications of a Republican sweep in the November elections.
With downside potential for bond prices this week, investors may be reducing market risk ahead of the July 4th holiday by selling off shares of rate-sensitive bond funds today.
As recently as six months ago, investors expected up to six rate cuts by the end of the year. That expectation is now down to one or two rate cuts, beginning in September.
Nvidia Short Interest Rises Monday
Interest in shorting chipmaker Nvidia jumped on Monday as NVD, the GraniteShares 1.5x Short NVDA Daily ETF soared over 2.7% in early trading while NVDQ, the T-Rex 2X Inverse NVIDIA Daily Target ETF rose more than 2.2%. NVDQ is among Monday's top actively traded ETFs, according to etf.com data with nearly 4M shares in trading volume.


Collectively, NVD and NVDQ, which bet on the price of Nvidia falling, have pulled in a net of close to $56 million in the past month.
Nvidia's share price has slumped lately as investors question whether it retains momentum to rise beyond the three-fold gain over the past year. Nvidia sell offs have dragged down the tech sector, causing drops in XLK, the Technology Select Sector SPDR Fund and semiconductor ETFs that have major allocations to the stock.
In early trading Monday, Nvidia shed earlier losses and was down about 1%, dragging down USD, the ProShares Ultra Semiconductors ETF, which sank 1.6%. The fund has allocated more than a third of its fund to Nvidia. SHOC, the Strive U.S. Semiconductor ETF was also affected Monday, dropping close to 1%.
Markets Rise to Kick off New Quarter
More broadly, markets fluctuated as July kicked off not only a new quarter, but also the second half of the year. SPY, the SPDR S&P 500 ETF Trust slipped beneath the flatline, losing just under 0.1% while DIA, the SPDR Dow Jones Industrial Average ETF Trust lost earlier gains and was unchanged. Investors are questioning whether tech stocks will be able to continue with strength in the back half of the year as corporate earnings from companies like Micron gave weaker than anticipated outlook going forward.
Looking ahead, investors await June's jobs report in hopes that a cooling economy will spur the Federal Reserve into doling out a rate cut in the Fall.
Investors look to Friday's Jobs Report for more Fed Clues
The Labor Department is set to release June's much-anticipated jobs report early Friday morning. According to economists polled by Dow Jones, the unemployment rate is expected to remain unchanged at 4%. Economists and investors alike have been closely watching the jobs report for any clues to the future path of rate cuts from the Fed.
The Fed has long looked at the jobs report as a proxy of the U.S. economy's strength; despite a "higher for longer" rate environment, the economy has held on with resilience. Though inflation has cooled dramatically since 2022, the Fed has slashed hopes of 6 rate cuts in 2024 to just one in the fall. According to the CME Fed Watch Tool, the first rate cut isn't expected until September.
Last week, the Fed's preferred inflation gauge, the personal consumption expenditures index (PCE) showed inflation cooling to an annual rise of 2.6%, the smallest increase since March of 2021.
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