The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) slumped to its lowest level since 2004 as volatility in the US bond market persisted. The ETF has now plunged more than 50% from its all-time high. Despite the sharp decline, data shows that US investors have continued to pour money into the fund, with inflows remaining relatively steady.
TLT ETF is Seeing Inflows Despite Bond Market Jitters
American investors have continued to allocate cash to the iShares 20+ Year Treasury Bond ETF despite the ongoing sell-off. ETF Db data shows that the fund has had over $4.7 billion in inflows in the last 30 days, bringing its total assets to over $46 billion.
These inflows have continued even as concerns in the bond market accelerated, with the 30-year Treasury yield hitting a two-decade high of 5.336%. It has been in a strong uptrend after bottoming at 0.717% in 2020.
This surge prompted Treasury Secretary Scott Bessent to launch a major bond buyback operation. The buyback initially pushed the yield down to 5.18%, but it soon resumed its upward trend, reaching the current level of 5.276%.
There is a risk that US bond yields will continue to rise. Total US government debt has surpassed $40 trillion, and with budget deficits continuing to widen, the debt is likely to keep growing, potentially reaching $50 trillion within the next few years.
There are also signs that the economy is slowing. The most recent data showed that the economy lost 23,000 jobs in July, while retail sales plunged. Other metrics like industrial and manufacturing production also retreated during the month.
iShares 20+ Year Treasury Bond ETF Technicals Point to More Downside
The TLT ETF has been in a strong downward trend this year, moving from the year-to-date high of $90.87 to the current $82.05. It recently dropped below the crucial support level of $82.80, its lowest level on May 19 this year.
The fund has remained below all moving averages and is in the process of forming a bearish flag pattern. Therefore, the fund will likely continue falling, potentially to the psychological level of $80. A clear move above the 50-day moving average of $83.6 will invalidate the bearish outlook.
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