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iShares 7-10 Year Treasury Bond ETFNYSEARCA
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  • Wed, Dec. 7, 2:12 PM
    • Led by Candace Browning, the team sees core PCE rising to 1.9% by the end of next year, and maybe even overshooting the Fed's 2% target.
    • At the moment, the market is anticipating just two rate hikes in 2017 and two more the following year, meaning there's plenty of room for expectations to ratchet higher (ed: or lower).
    • While growth may slow in H1 next year, H2 should run hot as boosted fiscal spending kicks in.
    • Though the inflation party has started across the globe, Europe has yet to receive an "invitation," they say.
    • After nearly rising to 2.50% a couple of sessions ago, the 10-year Treasury yield has pulled back another four basis points today to 2.35%. TLT +0.8%, TBT -1.6%
    • ETFs: IEF, PST, IEI, TYO, UST, DTYS, VGIT, TBX, SCHR, ITE, GSY, TYD, DTYL, DFVL, TBZ, DFVS, TYNS, HYDD
    | Wed, Dec. 7, 2:12 PM | 5 Comments
  • Mon, Nov. 28, 3:37 AM
    | Mon, Nov. 28, 3:37 AM | 11 Comments
  • Mon, Nov. 14, 2:48 PM
    • Add Fidelity Ford O'Neil's voice to that of Van Hoisington questioning whether the post-election surge in interest rates makes sense.
    • "It is all based on speculation,” he tells Bloomberg. "The market has glommed on to the good news about growth, but not how challenging it would be to enact such a program or negatives like restrictions on trade.”
    • Ford is among the managers of the Fidelity Total Bond Fund (MUTF:FTBFX).
    • Three things could undermine the recent run-up in yields: the Fed's commitment to just a very gradual boost to short-term rates, the traditional aversion to budget deficits by a Republican Congress, and overseas buyers who may take advantage of lower prices to scoop up Treasurys.
    • ETFs: IEF, PST, IEI, TYO, UST, DTYS, VGIT, TBX, SCHR, ITE, GSY, TYD, DTYL, DFVL, TBZ, DFVS, TYNS, HYDD
    | Mon, Nov. 14, 2:48 PM
  • Mon, Nov. 14, 4:56 AM
    | Mon, Nov. 14, 4:56 AM | 8 Comments
  • Thu, Nov. 10, 11:06 AM
    | Thu, Nov. 10, 11:06 AM | 49 Comments
  • Thu, Nov. 10, 2:41 AM
    | Thu, Nov. 10, 2:41 AM | 1 Comment
  • Tue, Nov. 8, 4:39 AM
    | Tue, Nov. 8, 4:39 AM | 1 Comment
  • Tue, Oct. 18, 4:59 AM
    • Tracking the differential in the yield of TIPS (Treasury Inflation-Protected Securities) and conventional Treasury notes renders an indicator known as the BEI - the breakeven inflation rate.
    • The BEI gets its name because it represents a point of indifference - the level of inflation at which you’d receive approximately the same total return on your TIPS as you would on a conventional T-note if CPI inflation averages that rate over the next 10 years.
    • Back in February, the 10-year BEI cratered at 1.18%. It's now retesting the 1.67% resistance area. If it break, and stays, above 1.70%, the next upside objective is the 1.90% level, SA author Brad Zigler says.
    • If the pattern holds, investors could readjust their portfolio’s fixed income exposure and duration with the following ETF play: The 10-year BEI is proxied by the price ratio of the iShares TIPS Bond ETF (NYSEARCA:TIP) versus the iShares 7-10 Year Treasury Bond ETF (NYSEARCA:IEF).
    • Zigler notes that the TIP/IEF ratio broke above its 100-week simple moving average ("SMA" - see chart here). "Without going into a bunch of technical interpretation, suffice it to say that this sets up TIPS as the better buy for income-focused investors - for the long term."
    | Tue, Oct. 18, 4:59 AM | 8 Comments
  • Thu, Sep. 22, 3:15 PM
    • The Fed may be talking a tough game about a November or December move, but Manulife Asset Management's Megan Greene, says "lackluster" data means the central bank won't be able to justify a hike in 2016.
    • Noted by Greene: "Incredibly sluggish" average hourly earnings; the stronger the threat to hike, the more the dollar moves up as other central banks ease further; three jobs reports and a presidential election means plenty of uncertainty prior to the Dec. FOMC meeting.
    • Greene maintains her expectation for the next rate hike not to come until Q2 of next year.
    • ETFs: IEF, PST, IEI, TYO, UST, DTYS, VGIT, TBX, SCHR, ITE, GSY, TYD, DTYL, DFVL, TBZ, DFVS, TYNS, HYDD
    | Thu, Sep. 22, 3:15 PM | 1 Comment
  • Tue, Aug. 30, 8:03 AM
    • Five-year Treasurys are completing their worst month since February 2015, but Morgan Stanley recommends buying the dip as the team there heard nothing at Jackson Hole that sways their view of no rate hike next month.
    • This week's August payrolls report presents an "obvious risk," say strategists Matthew Hornbach and Guneet Dhingra, but they continue to believe no move is coming in September.
    • The yield on the five-year note climbed to 1.24% in Friday, and has since retreated to 1.19%, still up a full 16 basis points in August.
    • According to JPMorgan, August jobs numbers have fallen shy of estimates in each of the last five years. The team at that bank continues to be a believer in five-year paper.
    • ETFs: IEF, PST, IEI, TYO, UST, DTYS, VGIT, TBX, SCHR, ITE, GSY, TYD, DTYL, DFVL, TBZ, DFVS, TYNS, HYDD
    | Tue, Aug. 30, 8:03 AM | 1 Comment
  • Wed, Aug. 24, 3:40 PM
    • Today's strong auction of five-year Treasury notes showed record demand from indirect bidders, mostly foreign central banks.
    • "I think there is a very large Hint here," says Mark Grant of Hilltop Securities, noting central bankers talk to each other and it's likely overseas central bank would not be jumping in to shortish-term paper in a large way if they had been tipped off about an imminent rate hike.
    • Source: Amey Stone at Barron's
    • ETFs: IEF, PST, IEI, TYO, UST, DTYS, VGIT, TBX, SCHR, ITE, GSY, TYD, DTYL, DFVL, TBZ, DFVS, TYNS, HYDD
    | Wed, Aug. 24, 3:40 PM | 1 Comment
  • Thu, Jul. 7, 2:08 PM
    • With $13.4T in Treasury paper out there, the U.S. government bond market is the largest and most liquid one in the world. But at least one fund manager worries whether he'll be able to get his hands on any in some future bull move. "The scarcity factor is there but it really becomes palpable during periods of stress when yields immediately collapse,’’ says Christopher Sullivan. "You may be shut out of the bond market just when you need it the most.’’
    • Source: Min Zeng and Christopher Whittall in the WSJ
    • The Fed owns more than 20% of all Treasury debt outstanding, a near-double since before the financial crisis.
    • Meantime in the U.K., the BoE owns about 25% of that country's debt; the BOJ more than 33% of Japan's paper; the ECB about 15% of Germany's bonds.
    • Toss out paper with negative yields (20-year JGBs just went below zero), and there's not a lot of high-grade, positive-yielding paper out there. Those feeling the pinch the most are pension funds and life insurance firms. For this reason, money manager Nigel Jenkins expects any rise in bond yields to be quickly met with a wave of buying from the yield-starved institutions.
    • ETFs: IEF, PST, JGBS, JGBD, IEI, TYO, UST, PLW, DTYS, VGIT, GOVT, BUNL, TBX, SCHR, FTT, ITE, JGBL, GSY, BUNT, TYD, DTYL, GGOV, EGF, JGBT, DFVL, JGBB, TAPR, TBZ, DFVS, TYNS
    | Thu, Jul. 7, 2:08 PM | 1 Comment
  • Mon, Jun. 27, 10:35 AM
    | Mon, Jun. 27, 10:35 AM | 27 Comments
  • Wed, Jun. 15, 4:18 PM
    | Wed, Jun. 15, 4:18 PM | 19 Comments
  • Thu, Jun. 9, 3:26 PM
    • This month's FOMC meeting also brings with it updated economic projections as well as the dot plot showing Fed members' expectations of where the Fed Funds rate is headed over time.
    • Led by Ellen Zentner, the team at Morgan Stanley expects "sweeping changes" to growth forecasts and the longer-run nominal equilibrium rate - that's currently at 2%, but downward revisions from just three members would send it to a "one" handle.
    • Assessment of the longer-run neutral Fed Funds rate has been already been trending down, and downward revisions from four would send that to 3% from 3.25%.
    • As for the "dots," the median expectation for 2016 will remain centered on two hikes, but Morgan Stanley expects only a December move.
    • The medan dot for 2017 will fall to 1.625% (3 hikes) from 1.875%, and for 2018 to 2.375% from 3%.
    • The decline in the intended pace of hikes is likely to support the belly of the yield curve relative to the wings.
    • ETFs: IEF, PST, IEI, TYO, UST, DTYS, VGIT, TBX, SCHR, ITE, GSY, TYD, DTYL, DFVL, TBZ, DFVS, TYNS
    | Thu, Jun. 9, 3:26 PM
  • Mon, Jun. 6, 3:11 PM
    • The Fed's Labor Market Conditions Index fell sharply in May in what was the biggest one-month decline since the end of the 2009 recession. April was also revised lower. The gauge has now fallen every month in 2016.
    • Jefferies' Thomas Simons says the index's declines in February and March stood in major to contrast to strong gains in the nonfarm payrolls data even though the two have a strong correlation. At the moment, it looks like the divergence is being resolved toward the weaker signal.
    • Then there's The Conference Board's Employment Trends Index (ETI). It also declined last month after gaining in April. The overall trend this year is flat after years of growth since the recession. The Conference Board's Gad Levanon says the number suggest modest employment growth in coming months, but fall well short of predicting job losses.
    • Previously: Yellen takes note of weakening labor trend (June 6)
    • ETFs: IEF, PST, IEI, TYO, UST, DTYS, VGIT, TBX, SCHR, ITE, GSY, TYD, DTYL, DFVL, TBZ, DFVS, TYNS
    | Mon, Jun. 6, 3:11 PM | 16 Comments
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