Treasury ETF Lowest Since Aug 2011 on Fed Taper Talk | ETF Trends

A popular ETF tracking long-term Treasury bonds fell to its lowest since August 2011 on Friday as the stronger-than-expected employment report for June triggered speculation the Federal Reserve will pull back on quantitative easing.

The iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) was down 2.5% in early trading Friday as yields on the 10-year note touched 2.7% for the first time in nearly two years. Bond prices and yields move in opposite directions.

The U.S. economy created 195,000 new jobs last month, more than expected, while the April and May figures were revised higher.

Yields on the 10-year Treasury note rose the most since October 2011 as investors positioned for the Fed to reduce the size of its asset purchases, Bloomberg News reports.

“Expectations for a September taper are being completely priced in,” said Shyam Rajan, interest-rate strategist at Bank of America Merrill Lynch, in the article. “The market’s expecting a smaller balance sheet going forward.”

“It’s a good number — it doesn’t hurt the tapering camp,” added Sean Murphy, a trader at Societe Generale. [Treasury, Gold ETFs Tank After Jobs Report as Dollar Spikes]