Interest rates continued to climb in September, with Treasury yields of varying durations hovering around 5%. The yield for the two-year Treasury note reached 5.08% on Oct. 6. Meanwhile, the 10-year Treasury note yielded 4.78% at this time. The 30-year Treasury note ended the day at 4.95%.
According to BondBloxx, yields for long-duration bonds rose by nearly 50 basis points. Meanwhile, the 10-year yield rose by nearly 20 bps.
“Following September’s Federal Reserve policy meeting and commentary, and continued strong labor numbers, it seems that investors are embracing the concept of ‘higher for longer’ and adjusting their expectations for higher policy rates through 2024,” BondBloxx wrote.
Targeting Durations From Six Months to 20 Years
BondBloxx has a suite of eight duration-specific U.S. Treasury ETFs range in duration from six months to 20 years. The funds 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.
Launched in October 2021 to develop precision fixed income ETFs, BondBloxx now offers 20 funds that span U.S. Treasuries, industry- and credit-rating-specific high-yield bonds, and emerging markets bonds.
“BondBloxx is one of the more innovative providers of fixed income ETFs,” said VettaFi’s head of research Todd Rosenbluth. “They offer advisors and investors the opportunity to target duration with risk-off government bonds.”
The issuer recently crossed the $2 billion asset mark due to demand for its Treasury bond ETFs. BondBloxx co-founder Joanna Gallegos said at a panel on VettaFi’s Fixed Income Symposium that Treasuries are a great alternative to cash.
“It’s hard to walk away from a 5% risk-free yield,” she added.
For more news, information, and analysis, visit the US Treasuries & TIPS Fixed Income Channel.
