The Government Didn’t Shut Down, So Treasury Yields Are Now Up

U.S. Treasury yields rose on Monday after Congress passed a stopgap funding bill on Saturday to avert a government shutdown. Yields for 10-year Treasuries rose to 4.641%, while the two-year reached 5.110%.

Reuters is reporting that yields for 10-year Treasury notes rose 48 basis points in September. That’s the largest monthly increase in a year.

“The agreement takes away the risk that the release of government data will be delayed, which would have been likely to keep the Federal Reserve on the sidelines,” wrote Karen Brettell at Reuters.

See more: “Capture High Yields From Long-Term Treasuries With XTEN

Michael Lorizio, senior fixed income trader at Manulife, said a shutdown would be a challenge for the Fed. After all, with a shutdown, the U.S. central bank would have “no data to base their next move on.”

“You would have essentially had to price out any chance of any sort of Fed action,” he added.

Target Duration With BondBloxx ETFs

So, with a government shutdown averted and yields approaching or above 5%, investors may want Treasury ETFs in their portfolio. For those investors, BondBloxx offers a suite of eight duration-specific U.S. Treasury ETFs. They track a series of indexes that include duration-constrained subsets of U.S. Treasuries with more than $300 billion outstanding. They’re designed to track indexes that achieve target durations using U.S. Treasury securities instead of specific maturities or maturity ranges.

The ETFs range in duration from six months to 20 years.

Strong Demand for Treasury Bond ETFs

BondBloxx was launched in October 2021 to develop precision fixed income ETFs. Now, the issuer offers 20 funds that span U.S. Treasuries, industry- and credit-rating-specific high yield bonds, and emerging markets bonds.

“BondBloxx is one of the more innovative providers of fixed income ETFs,” said VettaFi’s head of research Todd Rosenbluth. “They offer advisors and investors the opportunity to target duration with risk-off government bonds.”

The issuer recently crossed the $2 billion asset mark, largely due to demand for its Treasury bond ETFs. At a panel on VettaFi’s Fixed Income Symposium, BondBloxx co-founder Joanna Gallegos said that U.S. Treasuries have been a great alternative to cash. They’re also a great way to capture as much yield as possible.

“It’s hard to walk away from a 5% risk-free yield,” she said.

For more news, information, and analysis, visit the US Treasuries & TIPS Fixed Income Channel.