US Long-Term Treasury ETF TLT Hits Lowest Price Since 2004

The price of TLT (iShares 20+ Year Treasury Bond ETF), a popular exchange-traded fund investing in U.S. government bonds with remaining maturities of 20 years or more, has hit its lowest level since 2004.

The drop is driven by a surge in long-term U.S. Treasury yields, fueled by growing federal budget deficits and fundraising by artificial intelligence (AI) companies.

TLT, the most actively traded among U.S. long-term Treasury ETFs, closed down 0.84% from the previous session at $81.35 on the 17th (local time).

This marks the lowest level since June 14, 2004.

According to financial information provider FactSet data, TLT fell 6.6% year-to-date through this day, marking its worst performance since the historic bond market crash of 2022.

Because bond prices move inversely to bond yields, the sharp decline in TLT reflects a surge in long-term U.S. Treasury yields.

The yield on the 30-year U.S. Treasury bond continued its upward trend since late June, rising another 4.5 basis points (1 bp = 0.01 percentage point) on the 17th to 5.31% per annum.

This is the highest level since June 29, 2004.

The 10-year yield also rose 3 basis points to 4.725%.

According to Dow Jones Market Data, this is the highest level since the inauguration of the second Donald Trump administration.

Louis Alvarado, co-head of global fixed income at Wells Fargo Investment Institute, analyzed that the investment appeal of long-term U.S. Treasuries and TLT has diminished due to the increasing federal budget deficit and the AI-driven fundraising boom.

When the budget deficit widens, the government must issue more treasury bonds to cover its spending.

The U.S. government issued 30-year treasury bonds last week at the highest interest rates since 2001.

Hyperscalers (large-scale data center operators) are also raising massive amounts of capital in the bond market to build AI infrastructure.

In an interview with MarketWatch, Alvarado said, "Both government and corporate bonds are looking for long-term investors."

BlackRock, the world's largest asset manager and operator of TLT, stated that some investors are utilizing recent lows to make additional purchases.

It noted that $6.4 billion has flowed into TLT on a net basis since last July up to the present.

Yulia Alekseyeva, head of fixed income at MissionSquare, said, "Long-term yields are increasingly driven by fiscal and supply dynamics rather than simply the Fed's next move," adding, "While weak short-term economic indicators have reduced pressure for short-term rate hikes, fiscal risks, supply volumes, and the Fed's reduced bond purchases are demanding higher premium levels for long-term yields."

(Photo: AP, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.