Ahead of the Federal Reserve’s FOMC meeting scheduled this week, the iShares 20+ Year Treasury Bond ETF moved off of its reaction highs, and the ProShares Short 20+ Year Treasury ETF moved off of its reaction lows. While Treasury prices moved higher last week due to a flight to safety, prices resumed their downward trend early this week, as the stronger economy has bolstered the case for further interest rate hikes this year.
According to the CME Group’s FedWatch, the vast majority of traders are betting on an interest rate hike to a range of 150 to 175 basis points this week. The futures market predicts just a 5.6% chance that the target rate will remain the same on the March 21 meeting. The greater uncertainty is related to the Federal Reserve’s commentary surrounding the anticipated rate hike, including its prediction for how many additional hikes will be made this year. (See also: Introduction to Treasury Securities.)
Treasury ETFs moved lower ahead of this week’s FOMC meeting, where a rate hike is widely expected by the futures market. …read more
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Category: TLT, TBF