Impact of U.S.-China Trade Tensions and Shutdown on Long-Term U.S. Treasury ETF Yields
The renewed U.S.-China trade tensions have led to differing yields among U.S. long-term treasury exchange-traded funds (ETFs). ETFs linked to dollar value have recorded high returns, while those invested in yen have shown lackluster performance. This divergence is largely attributed to the recent decline in U.S. Treasury rates, which has naturally impacted ETF yields.
Simultaneously, fluctuations in the dollar-yen exchange rate have also influenced these yields, with expectations of relaxing Japanese monetary policy nudging the yen weaker. On another front, the U.S. government shutdown is preventing further declines in long-term yields, as uncertainty stemming from missing economic indicators persists. Consequently, despite this uncertainty, the market perceives little likelihood of additional rate declines.
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