The Fed recently announced its fourth consecutive three-quarters of a percentage point interest rate hike, taking the target range to 3.75% to 4%, its highest since January 2008. The latest move comes after inflation rose higher than expected in September, climbing 8.2% year-over-year.
The Fed Chair Jerome Powell indicated that the decision to slow the rate increase pace would be taken at the next Fed meeting. However, Powell cautioned that the final level of interest rates would be higher than expected.
The Fed’s rate hikes have created an inverted yield curve, which happens when shorter-term government bonds have higher yields than long-term ones. The 2-year Treasury yield is currently 4.666%, higher than the 10-year Treasury yield at 4.149%. This makes the prospects bleak for long-term bond-focused investments.
iShares 20+ Year Treasury Bond ETF (TLT)
BlackRock Fund Advisors manage TLT. The fund invests in U.S. dollar-denominated fixed-rate U.S. Treasury securities with a remaining maturity of greater than or equal to twenty years. It seeks to track the performance of the ICE U.S. Treasury Bond ETF by using a representative sampling technique.
With $22.57 billion in assets under management (AUM), TLT’s top holding is United States Treasury Bond 1.875% 15-Feb-2051, which has a 10.99% weighting in the fund, followed by United States Treasury Bond 2.0% 15-Aug-2051 at 7.66%, and United States Treasury Bond 3.0% 15-Feb-2049 at 6.79%. It has a total of 33 holdings.
Its fund flows were negative $1.50 billion over the past five days. Its NAV was $94.21 as on November 8, 2022. TLT has declined 36.4% year-to-date and 36.7% over the past year to close the last trading session at $94.30.
TLT’s POWR Ratings reflect its bleak prospects. It has an overall D rating, equating to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
VanEck Gold Miners ETF (GDX)
Van Eck Associates Corporation manages GDX. The fund offers investors indirect exposure to precious metals by investing in stocks of companies operating across materials, metals, and mining, gold, and silver sectors around the world.
GDX seeks to track the performance of the NYSE Arca Gold Miners Index by using the full replication technique. With $10.16 billion in AUM, GDX’s top holding is Newmont Corporation (NEM), which has a 12.30% weighting in the fund, followed by…
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