TLT, Other Bond ETFs Hit 2024 Lows on Rate Outlook

Confidence in a June rate cut is fading.

Senior ETF Analyst
Reviewed by: Staff
Edited by: Ron Day

Bond ETFs edged close to their lowest levels of the year this week as Fed rate cut expectations continue getting pushed further into the future. 

The iShares 20+ Year Treasury Bond ETF (TLT) fell to a four-month low on Friday after the 30-year Treasury bond yield surged past 4.5%. Meanwhile, the broader iShares Core US Aggregate Bond ETF (AGG), which holds a variety of investment grade bonds of varying maturities, matched its 2024 low point from February. So far this year, TLT and AGG have lost 6.3% and 1.6%, respectively. That compares to full-year gains of 2.8% and 5.7% in 2023. 

U.S. nonfarm payrolls jumped more than expected in March, cutting the unemployment rate while modest wage growth eased concerns about the Federal Reserve's response to inflation.

Strong Growth, Elevated Inflation  

Last Friday, the Bureau of Economic Analysis reported that core PCE inflation ran at a 0.3% month-over-month rate in February. While less than January’s 0.5% reading, it was hotter than the Fed would like, and caused traders to reevaluate when the first Fed rate cut might come. 

Then on Monday, the Institute of Supply Management reported that its manufacturing index edged up to 50.3 in March, its best level since September 2022, further advancing the narrative of delayed rate cuts. 

On Wednesday, Fed chair Jerome Powell emphasized that the central bank was in no rush to cut rates. 
“We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2%. Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy,” he said at a conference at Stanford University. 

Friday’s nonfarm payrolls report supported the chairman’s view that the U.S. economy remains strong.

According to the Bureau of Labor Statistics, employers added 303,000 jobs in March, up from 270,000 the previous month, while the unemployment rate edged lower from 3.9% to 3.8%. 

Diminishing Confidence  

Pricing based on fed funds futures suggests that there is a roughly 50% probability that the first rate cut will come in June. 

However, before this latest batch of economic data, the probabilities were much higher, indicating that traders are growing less confident that a rate cut will happen that month. 

This week’s fresh lows in bond prices (and highs yields) tell a similar story—that Fed rate cuts will happen later than preciously anticipated, and that there might not be as many of them. 

The futures market currently foresees three rate cuts that bring the federal funds rate down to a range of 4.5% to 4.75%.

At the start of the year, the market was expecting six rate cuts. 

Sumit Roy is the senior ETF analyst for, 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, 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, with a particular focus on stock and bond exchange-traded funds.

He is the host of’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,’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.