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Record 38% Plunge in Bond ETF Leaves Bearish Traders Exhausted

  • TLT short-interest at all-time low despite abysmal performance
  • Investors ‘gun shy’ on shorting Treasuries: Contopoulos
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Markets Should Not Price in Rate Cuts Next Year: Xu

A brutal wipeout in a $25 billion bond exchange-traded fund has investors wagering that the worst is over on the eve of a crucial Federal Reserve decision.

The price of the iShares 20+ Year Treasury Bond ETF (ticker TLT) has plunged 38% from its August 2020 peak in the biggest drawdown since the fund’s 2002 inception, according to Bloomberg data. Meanwhile, IHS Markit Ltd. data show that short interest as a percentage of TLT’s shares outstanding dropped to a record low of 0.15% on Monday, after reaching 13% earlier this year.