Treasury ETF And Real Estate Sector Rise Together As 30-Year Yields Dip Below 4%
Portfolio Pulse from Piero Cingari
U.S. 30-year Treasury yields fell below 4%, the lowest since late July, prompting a rise in fixed income and real estate assets due to expectations of Federal Reserve rate cuts. The iShares 20+ Year Treasury Bond ETF (TLT) surged 21% since late October, and the Real Estate Select Sector SPDR Fund (XLRE) increased by 19% over the past three months, both benefiting from the market's anticipation of rate reductions.
December 27, 2023 | 8:37 pm
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POSITIVE IMPACT
The iShares 20+ Year Treasury Bond ETF (TLT) has entered a bull market with a 21% increase since late October, driven by declining long-term Treasury yields and over $8 billion in net inflows in the last three months.
The decline in 30-year Treasury yields below 4% and the market's anticipation of Fed rate cuts have directly impacted TLT's performance. The ETF's significant price increase and substantial inflows suggest strong investor confidence, which is likely to continue in the short term, especially with the technical indicator of crossing the 200-day moving average.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90
POSITIVE IMPACT
The Real Estate Select Sector SPDR Fund (XLRE) has risen by 19% over the past three months, benefiting from the declining interest rate environment and lower Treasury yields.
XLRE's performance is closely tied to interest rate expectations and Treasury yields. With the market pricing in potential Fed rate cuts and mortgage rates declining, the real estate sector has seen a significant uptick, which is reflected in XLRE's recent gains. The fund's strong performance is likely to persist in the short term if the current trends continue.
CONFIDENCE 80
IMPORTANCE 80
RELEVANCE 90