Negative Duration Bond ETFs - Right Time To Bet?

With increasing energy prices, growing inflationary expectations and an improving job market, the Treasury yields have been on the rise yet again in recent weeks. Yields on 10-year Treasury notes (TNX) saw a sudden and sharp jump from $1.890 on April 16 to near $2.35 as of today – the highest level in more than five years (read: 3 ETFs to Watch on Rising Rates).

The most recent surge in yields came from solid April job numbers. The government report showed that the U.S. economy added 223,000 jobs in April, suggesting a strong rebound from the revised 85,000 job gains reported in March – the worst monthly performance in almost three years. This has spread optimism and confidence into the U.S. economy, easing fears of an extended slowdown. The unemployment rate dropped to 5.4%, the lowest level since mid 2008. Robust job numbers also raised speculation that a rate hike by the Fed is back on the table.

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