iShares TLT ETF sinks to lows last seen in June 2004

The iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT ) traded as low as $81.80 on Friday, down 1.03% on the week and reaching its lowest level since June 2004.

The world’s biggest fixed-income ETF, which holds U.S.

Treasury bonds maturing in more than 20 years, has now fallen more than 50% since its March 2020 highs, reflecting the skyrocketing cost of borrowing for the U.S. government.

TLT peaked above $170 in 2020 and now sits roughly 52% below that high.

QUICK CONTEXT: Why America’s Long Bond Is Selling Off The U.S. long-bond selloff has intensified since late June.

Treasury’s 30-year constant-maturity yield rose from 4.91% on June 30 to 5.21% on August 13, while Thursday’s $25 billion 30-year auction cleared at 5.216%, the highest auction yield in roughly 25 years.

The pressure is coming from several directions.

Inflation is still above the Federal Reserve’s 2% goal: July CPI rose 3.4% from a year earlier, while producer prices were up 4.7%.

The Fed held rates at 3.5%-3.75% on July 29, but three policymakers preferred a quarter-point increase.

Fiscal supply is the other major concern.

Treasury on August 3 raised its July-September borrowing estimate to $739 billion, $68 billion above its May projection.

Its advisory committee also said projected funding gaps could require higher coupon issuance in fiscal 2027.

Energy shocks have added another inflation risk.

Treasury’s borrowing advisers said renewed Iran tensions pushed oil higher in July and helped markets shift from expecting rate cuts toward pricing possible hikes.

Even softer July consumer inflation has not reversed that longer-term concern.

Higher long yields matter well beyond Treasuries: they raise mortgage, corporate and government borrowing costs and can pressure stock valuations.

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