Holy-Moly Mortgage Rates Hit 5.64%, 10-Year Treasury Yield 3.12%, Long-Term Treasury Bond Fund Gets Massacred, by Wolf Richter

Interest rates’ spectacular ascent is due a pause, but the long term trend has shifted from the down to up. From Wolf Richter at wolfstreet.com:

So the Fed Gets Ready to Walk Away from the Bond Market, and All Kinds of Stuff Happens.

he price of the iShares 20+ Year Treasury Bond ETF [TLT], which tracks an index of Treasury securities with long maturities, dropped another 1.5% on Friday, after having dropped 2.7% on Thursday. It has plunged 21% year-to-date and 33.7% from the peak in August 2020. In return for this plunge in price, investors get a yield that has risen to 3.0%.

August 2020 marked the peak of the greatest bond-market bubble in US history. It was when the 10-year Treasury yield hit historic lows while our favorite hype mongers predicted that it would drop below zero and become negative. But this bond bubble is blowing up. And this is what the “bond massacre” looks like for investors who’d thought they’d invested in a conservative instrument, when in fact they’d bought a high-risk bet on the continuance of the bond bubble, a bet on long-term interest rates going negative. And WHOOSH went their money:

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