Exchange traded funds (ETFs) indexed to Treasury bonds were set to weaken Monday as yields rose while investors awaited speeches from several Federal Reserve officials.
Ten-year Treasury notes declined while bets on inflation moving higher reached a three-week high Monday, according to Bloomberg.
PIMCO’s Bill Gross made waves last week when he said Treasuries have “little value” due to the growing debt load in the U.S. [Treasury ETFs: Bill Gross Talks Book On Bonds.]
Fed chief Ben Bernanke is scheduled to speak later Monday. Investors will also be monitoring speeches from Atlanta Fed chief Dennis Lockhart and Chicago Fed President Charles Evans.
The difference between yields on 10-year notes and Treasury Inflation Protected Securities (TIPS) was at its widest point since March 9, signaling traders are positing for higher inflation, Bloomberg reported.
The $19.8 billion iShares Barclays TIPS Bond Fund (NYSEArca: TIP) bounced from a 2011 low around $105 a share to above $110 in mid-March although the ETF has pulled back somewhat recently.
For full disclosure, Tom Lydon’s clients own TIP.