Over the last few months bond investors have been hit with the worst combination of rate moves. Intermediate and long-duration bonds have been rising rapidly while the very short-term rates have actually continued to decline. This can be seen in the charts below, which show the 30-yr Treasury Rate, 10-yr Treasury Rate, and the 13-Week Treasury Rate.

The rise in long rates has led to TLT (iShares 20-yr Treasury Bond ETF) losing over 20% from its 8/4/2020 closing high – that includes dividends paid over this time. A decline that large can be tough to make back when the current yield is just 2.1%.

But the drop in rates on the short end has also been painful. Many short-term bond ETFs are struggling to keep their yield above their expense ratio. And the only way they are managing to do so is with a big chunk of their bond holdings in BBB or lower rated securities. Of course yields below expense ratios over an extended period means a negative return is likely in those assets. Below is a list of some of the more popular short-term bond ETFs along with their stated 30-day SEC yield and their expense ratios.

The Fed is not likely to remove pressure on short-term rates anytime soon. But right now it means bond investors are losing on the long end, and are even struggling to breakeven on the short end.

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