Economy & Fed
Long-term Treasury fund slides after October inflation beats forecasts
TLT, a fund that holds long-term U.S. Treasury bonds, slid 1.3% on Tuesday after inflation ran hotter than forecast. The October consumer price report showed prices rose 0.4% and core prices, which leave out food and energy, climbed 0.3%, both above forecasts. Hours earlier, Fed Governor Christopher Waller had said a core reading around 0.3% or higher would put a larger rate hike on the table.
Bond prices fall when yields rise. The 30-year Treasury yield rose 9 basis points, and the 3-month bill yield, which tracks bets on the Fed's next move, rose 6 basis points. Polymarket, a betting market, put the odds of a December hike of 50 basis points or more at 11%, up from less than 1%. TLT lost $630 million in market value and sits 10.9% below its 52-week high. Pantheon Macroeconomics' Samuel Tombs still forecasts a 25-basis-point hike in December.
For readers
What it means for you: Tuesday took $380 from every $100,000 in an S&P 500 fund. TLT's share of the 500 largest U.S. companies' combined value is 0.05%, so its drop took $1 from $100,000 spread across them by size. On Polymarket, odds of a modest December hike rose to 85% from 79%. Odds of no change fell to 3% from 21%. A Fed hike could lift the prime rate, which most credit card and home equity line rates follow. The Fed publishes minutes of its October meeting Wednesday, Nov. 18, at 2:00 p.m. ET. They may show how far officials leaned toward hikes.
The numbers
| iShares 20+ Year Treasury Bond ETF (TLT) price | $80.88 |
|---|---|
| iShares 20+ Year Treasury Bond ETF (TLT) change | −1.32% |
| iShares 20+ Year Treasury Bond ETF (TLT) market value | $47 billion |
| iShares 20+ Year Treasury Bond ETF (TLT) 52-week high | $90.82 |
| S&P 500 change | −0.38% |
| 10-year Treasury yield | 4.98% |
Tuesday’s close
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Not investment advice.
