The 30-year Treasury yield rose, which can weigh on TLT’s long-term bonds. Lower inflation and fewer expected rate increases offered some relief, but the rise in long-term yields points to pressure on TLT.
Long-term bond prices usually fall when their yields rise. The higher yields followed stronger growth and a jump in service prices, which can keep pressure on long-term bonds. The lower inflation reading and reduced odds of a rate increase point the other way. But economists said much of the inflation drop came from measurement changes, and service prices rose faster in August.
The 10-year Treasury yield rose, which can weigh on IEF’s intermediate-term bonds. Lower inflation and fewer expected rate increases offered some relief, but the rise in the 10-year yield points to pressure on IEF.
Fewer expected rate increases could help SHY’s short-term bonds, but service prices rose and inflation remains above the Fed’s 2% target. These signals point in different directions, so the story does not change SHY’s outlook.
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