Ahead of today’s Federal Reserve post-meeting press conference, some traders are targeting popular fixed income ETFs, including the iShares 7-10 Year Treasury Bond ETF (NASDAQ: IEF).

The $8.50 billion IEF tracks the ICE U.S. Treasury 7-10 Year Bond Index. As its name implies, the fund provides exposure to U.S. Treasury bonds with remaining maturities between seven and ten years. Fed-funds futures data suggest traders overwhelmingly the Fed to raise rates again this month, pointing to potential downside for ETFs like IEF.

IEF “has pulled back considerably from its 2017 closing high of $108.72, though IEF has lately been mounting a bit of a challenge to resistance at its 80-day moving average — a former layer of support that has been surmounted just three times on a daily closing basis since late September (with those three closes occurring consecutively from Tuesday, May 29 through Thursday, May 31),” according to Schaeffer’s Investment Research.

What Markets Are Saying

IEF has an effective duration of seven years. Duration measures a bond’s sensitivity to changes in interest rates. The fund has 30-day SEC yield of 2.81%. IEF is down nearly 4% year-to-date and resides almost 3% below its 200-day moving average.

“Given IEF’s established downtrend and the strong likelihood of another imminent rate hike, it’s no surprise to find that traders are betting on more downside — and in massive numbers. Short interest on IEF more than doubled in the past two reporting periods, and the 8.03 million shares currently sold short represents a new high-water mark for these bearish bets,” according to Schaeffer’s.

Still, another Fed rate hike may not doom IEF. In fact, the ETF rallied following the March 2018 rate hike.

“IEF actually closed higher the day of that March 21 rate hike, and then gapped higher in the following session,” reports Schaeffer’s. “The positive momentum eventually carried IEF above its 50-day moving average, albeit briefly — suggesting that in the case of intermediate-term bonds, traders sold the expectations for a March rate hike, and then bought the news.”

For more information on the fixed-income market, visit our bond ETFs category.