Floating-rate bonds are supposed to be sailing right now.
So why are they sinking?
Last week we lamented the reason most bond funds are down this year. The runaway long rate is to blame.
Ten-year Treasury bonds began the year yielding 1.5%. Now, they pay 2.4%, a whopping 60% more in a quarter!
Nobody wants the 1.5% vintage when they can “level up” to 2.4%. So the old 1.5% bonds, while still paying their coupons, lose value.
So do funds that own Treasuries. The iShares 20+ Year Treasury Bond ETF (TLT), one of the most popular bond tickers on the planet, is down 10% year-to-date.… Read more