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Short interest in the $12 billion iShares 20+ Year Treasury Bond ETF (TLT) rose to 25% of shares outstanding this week. That’s the highest level since early 2017, according to data from IHS Markit. Investors and traders continue to dump the long Treasury and the ETF: the iShares 20+ Treasury ETF has posted outflows every day this week, putting it on track for weekly withdrawals of over $1 billion. According to Bloomberg that’s the worst stretch since November. The ETF is down 12% in 2021.

The rise in the long end of the Treasury market resumed this week after inflation expectations hit a multi-year high. The Federal Reserve didn’t help. After its Wednesday meeting Chair Jerome Powell stressed that the central bank views any jump in price pressures as fleeting and it won’t be dialing back crisis-level monetary support any time soon.

In other words, the Federal Reserve won’t be doing anything to push back falling prices and rising yields for long-dated Treasuries.

The money coming out of long-dated maturities is going into shorter-dated Treasuries, especially the five-year Treasury note. Traders and investors have been buying that maturity because 1) it’s not as sensitive to expectations of rising inflation (or actual increases in inflation) as the long-dated Treasury, and 2) it’s the most attractive Treasury hedge available against a decline in stocks.