The iShares 20+ Year Treasury Bond ETF (TLT), the largest US Treasury bond fund traded on exchanges, closed at a record low of $80.46 per share on Wednesday after falling 1.6%, following robust US economic data that renewed selling pressure across the bond market.
Since the fund reached its peak in 2020, it has lost more than half of its value. At that time, US Treasuries were in demand after the Federal Reserve slashed interest rates to near zero to cushion the economy during the COVID-19 pandemic. Since then, a combination of sustained rate increases, persistent inflation, and growing concerns over rising US government debt have continuously pressured long-duration bonds.
Launched in 2002 with $45 billion in assets under management, TLT became a widely used vehicle for investors betting that the bond market had bottomed out. "In this massive regime shift since 2020, investors have learned that something isn't safe simply because 'Treasuries' is printed on it," said Todd Sohn, senior ETF strategist at Baird Strategas. "You have to understand that bond duration is a real risk and this is a volatile investment instrument."
The latest phase of the selloff reflects rising expectations that the US central bank will continue tightening monetary policy in the coming months. Fed officials recently raised the cost of overnight loans for the first time since 2023. While rate increases have been sharpest for shorter-dated bonds in recent trading sessions, longer-duration Treasury prices tend to be especially sensitive to rising rates, adding further downward pressure on TLT shares.
