Short-term, Money Market Bond ETFs Reveal Rising Rate Expectations | ETF Trends

Yields on ultra-short-term debt and bond-related exchange traded funds are rising, revealing increased expectations of a Federal Reserve rate hike.

For example, the PIMCO Enhanced Short Maturity ETF (NYSEArca: MINT) has a 0.62% 30-day SEC yield and a 0.45 year duration. The Guggenheim Enhanced Short Duration Bond (NYSEArca: GSY) has a 0.34% 30-day SEC yield and a 0.47 year effective duration. The SPDR SSgA Ultra Short Term Bond ETF (NYSEArca: ULST) has a 1.59% 30-day SEC yield and a 0.27 year duration. The iShares Short Maturity Bond ETF(NYSEArca: NEAR) has a 1.09% 30-day SEC yield and a 0.68 year duration.

Additionally, short-duration Treasury bond ETFs are also showing rising rates. For instance, the iShares Short Treasury Bond ETF (NYSEArca: SHV) has a 0.42 year duration and a 0.13% 30-day SEC yield. [Rising Rate Preparation With Short-Term Bond ETFs]

Implied yields on federal-fund futures that expire in July 2015 were at 0.28%, compared to 0.255% at the end of last week and 0.185% in October, reports Liz Capo McCormic for Bloomberg.

The benchmark Federal rate has been held in a range of zero to 0.25% since 2008.

Federal Reserve Chair  Janet Yellen “went out of her way to emphasize that they could hike at any meeting and that it’s data-dependent, so they could do it sooner if there is faster progress,” Brian Smedley, an interest-rate strategist at Bank of America Corp., said in the article.. “The market is pricing in high odds of a mid-2015 hike.”