Individual investors are actively purchasing U.S. long-term Treasury exchange-traded funds (ETFs) that have recently dropped to near their annual lows. This surge in buying is interpreted as a strategy to capitalize on what is seen as a low point, following a recent rise in Treasury yields that has led to falling ETF prices. However, forecasts suggest that the upward trend in U.S. long-term Treasury yields may not reverse soon.
According to data from Korea Exchange and Koscom ETF Check on September 15, individual investors have net purchased 20.9 billion won in the TIGER U.S. Ultra Short-Term (less than 3 months) Treasury ETF and 17.2 billion won in the ACE U.S. 30-Year Treasury Active ETF over the past month. They also bought 5.4 billion won in the ACE U.S. 10-Year Treasury Active ETF and 3.9 billion won in the SOL U.S. 30-Year Treasury Covered Call (synthetic) ETF, making these the top three net purchases among bond ETFs, excluding ultra-short-term Treasuries.
Due to the rise in U.S. long-term Treasury yields, the prices of these ETFs are nearing their annual lows. The 'ACE U.S. 30-Year Treasury Active' ETF closed at 8,620 won, up 0.88% from its 52-week low of 8,545 won. The 'ACE U.S. 10-Year Treasury Active ETF' also rose 1.01% to 9,495 won, compared to its 52-week low of 9,400 won.
The declines have been significant. Over the past month, the 'TIGER U.S. 10-Year Treasury Futures' ETF has fallen by 6.6%, the largest drop among bond ETFs. The RISE U.S. 30-Year Treasury Covered Call ETF decreased by 6.45%, while the 'ACE U.S. 30-Year Treasury Active' ETF saw a decline of 6.43%, ranking among the highest in terms of loss.
The influx of individual investor funds into U.S. long-term Treasury ETFs is interpreted as a response to the recent rapid rise in Treasury yields, which are nearing peak levels. Investors believe that if bond yields peak and then decline, the currently depressed long-term Treasury prices could recover. The yield on the U.S. 10-Year Treasury has surged by 12.2% compared to three months ago, surpassing 5% for the first time since October 2023.
The outlook for the U.S. long-term Treasury ETF market appears bleak for the time being. The ongoing conflict in the Middle East is contributing to rising prices, creating significant market anxiety due to large-scale fiscal spending. Additionally, if the Bank of Japan raises interest rates within the year, it could further impact the market.
Kim Hak-kyun, a researcher at Shin Young Securities, stated, "If the economy were extremely hot, the Federal Reserve would continue to raise interest rates, but it seems to be swayed by external factors instead. If the current conflict in the Middle East continues, market interest rates may remain unstable."
According to data from Korea Exchange and Koscom ETF Check on September 15, individual investors have net purchased 20.9 billion won in the TIGER U.S. Ultra Short-Term (less than 3 months) Treasury ETF and 17.2 billion won in the ACE U.S. 30-Year Treasury Active ETF over the past month. They also bought 5.4 billion won in the ACE U.S. 10-Year Treasury Active ETF and 3.9 billion won in the SOL U.S. 30-Year Treasury Covered Call (synthetic) ETF, making these the top three net purchases among bond ETFs, excluding ultra-short-term Treasuries.
Due to the rise in U.S. long-term Treasury yields, the prices of these ETFs are nearing their annual lows. The 'ACE U.S. 30-Year Treasury Active' ETF closed at 8,620 won, up 0.88% from its 52-week low of 8,545 won. The 'ACE U.S. 10-Year Treasury Active ETF' also rose 1.01% to 9,495 won, compared to its 52-week low of 9,400 won.
The declines have been significant. Over the past month, the 'TIGER U.S. 10-Year Treasury Futures' ETF has fallen by 6.6%, the largest drop among bond ETFs. The RISE U.S. 30-Year Treasury Covered Call ETF decreased by 6.45%, while the 'ACE U.S. 30-Year Treasury Active' ETF saw a decline of 6.43%, ranking among the highest in terms of loss.
The influx of individual investor funds into U.S. long-term Treasury ETFs is interpreted as a response to the recent rapid rise in Treasury yields, which are nearing peak levels. Investors believe that if bond yields peak and then decline, the currently depressed long-term Treasury prices could recover. The yield on the U.S. 10-Year Treasury has surged by 12.2% compared to three months ago, surpassing 5% for the first time since October 2023.
The outlook for the U.S. long-term Treasury ETF market appears bleak for the time being. The ongoing conflict in the Middle East is contributing to rising prices, creating significant market anxiety due to large-scale fiscal spending. Additionally, if the Bank of Japan raises interest rates within the year, it could further impact the market.
Kim Hak-kyun, a researcher at Shin Young Securities, stated, "If the economy were extremely hot, the Federal Reserve would continue to raise interest rates, but it seems to be swayed by external factors instead. If the current conflict in the Middle East continues, market interest rates may remain unstable."
* This article has been translated by AI.
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