The iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) has fallen sharply in May to test its 52-week low as yields bump higher on upbeat economic data and consumer confidence.
The Treasury ETF is down nearly 7% the past month with yields on the 10-year note rising above 2.1%. Bond prices and yields move in opposite directions.
“Treasurys fell decisively Tuesday as bond investors priced in the possibility that an improving economy, bolstered by strong housing and consumer-confidence data, could push the Federal Reserve to begin winding down its bond purchases,” MarketWatch reports.
Last week, Federal Reserve chief Ben Bernanke and the latest Fed minutes hinted the central bank may soon start tapering its bond purchases, if the economic data justifies such a move.
Treasury yields rose to their highest levels in more than a year on Tuesday while long-dated debt was on track for its worst monthly loss in over three years, according to a Reuters report.
“The market is jittery, any sign of a potential pullback from the Fed or of stronger data and you are going to see a sharp move like we did in the past week,” said Sean Simko, portfolio manager at SEI Investments, in the article. “The path of least resistance is higher yields.”