Treasury ETFs Caught Between Debt Worries, Safety Trade

Tom Lydon submits: An exchange traded fund tracking long-dated Treasury bonds has pulled back somewhat after hitting its high for the year last week with investors scaling back risk in their portfolios.Despite all the chatter about the debt ceiling and inflation, iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT) is up 4% year to date.(Click charts to expand)

Tom Lydon submits: Exchange traded funds that invest in Treasury Inflation Protected Securities have been stuck in a range for over two months as traders eye inflation data and Treasury yields. Last week, the government said consumer prices rose 0.4% in April as gasoline prices surged. Some investors have been using ETFs that invest in TIPS in the bond segment of their portfolios. TIPS are seen as a way to fight inflation and protect purchasing power.

By Gregory Skidmore:The low interest rate environment we face has made fixed income the most challenging asset class to manage. As a portfolio manager, I am faced with a dilemma. I can invest in high-quality fixed income and receive little to no income or dramatically increase risk to achieve some income. In summary, there is no return being offered for safe fixed-income investments and the risk required to achieve a small amount of return is too great to be taken. So what am I doing with fixed income?

By BubbleBustInvesting.com:With the world economy heading for a double-dip recession and sovereign debt concerns growing, small and large investors are rushing to buy three assets that are considered a safe bet against uncertainty: gold, silver, and treasury bonds.

Tom Lydon submits: Stocks advanced Wednesday but Treasury exchange traded funds were all over the map as investors debated the likelihood of further “quantitative easing” from the Federal Reserve due to a slowdown in the U.S. economy and discouraging data recently on unemployment. The minutes of the latest Fed meeting released Tuesday showed some members would be receptive to changes in monetary policy if the economy worsens.

By Tom Lydon: U.S. Treasury exchange traded funds, last year’s hottest ETF investment, tumbled on the first trading session of 2012 as bond prices pulled back and yields on the 10-year note climbed toward 2%. The iShares Barclays 20+ Year Treasury Bond Fund (NYSEArca: TLT) dropped nearly 2% on Tuesday. The ETF soared more than 30% in 2011.

Tom Lydon submits: Exchange traded funds that invest in U.S. Treasury bonds rose Tuesday morning on renewed European debt jitters following last week’s sell-off.

MyPlanIQ submits:Treasuries were in a slump last week on improved economic fundamentals. As the economic recovery continues to solidify one must allow for the possibility that interest rates will rise further when adjusting their fixed-income portfolios. By examining the following trend score table for bond ETFs that represent various fixed income subclasses, one can gain some insights into the current fixed income market: