Exchange traded funds that invest in U.S. Treasuries were sharply lower Monday even though the bond markets were closed due to the Columbus Day holiday.
The dramatic move to the downside in Treasury funds was a reminder that ETFs often trade while their underlying markets are closed.
The iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) was down about 2% in midday trading Monday.
The bond ETF has sold off after climbing to a new high last week as Treasury yields recovered in the “risk-on” trade. Bond prices and yields move in opposite directions. [Treasury ETFs Fall as Investors Regain Risk Appetite]
ETFs that bet against Treasury bonds saw trading volume rise late last week. [Aggressive Call Buying in Financial ETFs; Bond Fund Outflows]
Stock ETFs rallied Monday after Germany and France signaled a stronger commitment to resolving the Eurozone debt crisis. The Dow gained nearly 300 points while the S&P 500 climbed back above its 50-day moving average in a victory for the bulls. [Equity ETFs Rise]
iShares Barclays 20+ Year Treasury Bond
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