Treasury yields rose on Wednesday following stronger-than-expected retail sales and encouraging remarks from a Federal Reserve member.
Data from the Census Bureau shows that sales for U.S. retail and food services sales for December 2023 were $709.9 billion. That’s up 0.6% from the previous month and up 5.6% percent from December 2022. This exceeded the average estimate of 0.4% from economists surveyed by Down Jones.
The Census bureau adjusts for seasonal variation and holiday and trading-day differences, but not for price changes.
Following the release of the sales data, CNBC reported that the 10-year Treasury yield rose 4 basis points to 4.108% on Wednesday. This is after briefly hitting 4.117%, the highest it’s been in over a month. Meanwhile, the yield for the two-year Treasury note went up by roughly 11 bps to 4.335%.
This rise in yields followed another bump on Tuesday after Federal Reserve Governor Christopher Waller suggested that the Fed is likely to cut rates this year.
Targeting Treasury ETFs While Yields Are Up
So, with yields up (for the time being), investors may want to consider adding Treasury ETFs to their portfolios. BondBloxx offers a suite of eight duration-specific U.S. Treasury ETFs. They track a series of indexes that include duration-constrained subsets of U.S. Treasuries with more than $300 billion outstanding. They’re designed to track indexes that achieve target durations using U.S. Treasury securities instead of specific maturities or maturity ranges.
Among them is the +BondBloxx Bloomberg Two Year Target Duration US Treasury ETF+ (XTWO ), which targets U.S. Treasury securities with an average duration of roughly two years. There’s also the BondBloxx Bloomberg Ten Year Target Duration US Treasury ETF (XTEN ), which targets Treasuries with an average duration of roughly 10 years.
The ETFs range in duration from six months to 20 years.
BondBloxx launched its first ETFs In February 2022. Now, it manages more than $2.5 billion assets. Its AUM has grown rapidly in large part because of high demand for its Treasury ETFs. BondBloxx Co-Founder Joanna Gallegos said that Treasuries have been a great alternative to cash and a great way to capture as much yield as possible.
“It’s hard to walk away from a 5% risk-free yield,” Gallegos said.
For more news, information, and analysis, visit the US Treasuries & TIPS Fixed Income Channel.