Long-term Treasury bond ETFs under pressure as investors weigh GDP report

“The economy slowed, but still doesn’t appear to be at risk of stalling,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors, in emailed comments Thursday. “The combination of slower growth and sticky inflation will undoubtedly increase the whispers around potential stagflation risk, potentially complicating the Fed’s job over the duration of the year.”

Long-term Treasury ETFs have seen losses so far this year amid a rise in Treasury yields, as the Federal Reserve keeps its benchmark interest rate elevated in an effort to bring inflation down durably toward its 2% target.

The Vanguard Long-Term Treasury ETF has tumbled 8.8% this year on a total return basis through Wednesday, while the iShares 20+ Year Treasury Bond ETF lost a total 9.7% over the same period, FactSet data show.

Meanwhile, the yield on the closely-watched 10-year Treasury note
BX:TMUBMUSD10Y
was up about seven basis points around midday Thursday at 4.71%, according to FactSet data. While Treasury yields have climbed this year, the 10-year Treasury yield remains below the roughly 5% level reached in October.  

Shares of the iShares Core U.S. Aggregate Bond ETF
AGG
were also falling on Thursday, down about 0.3% around midday for a more modest decline compared with the long-term Treasury funds, according to FactSet data, at last check. The iShares Core U.S. Aggregate Bond ETF is also down so far this year, but with a smaller total loss of 3% through Wednesday.