US Long-Term Treasury ETF Prices Hit 22-Year Low Amid Supply Pressure

The price of US long-term Treasury ETFs has fallen to $81.35, the lowest level in 22 years. This decline is attributed to an increase in government Treasury supply coinciding with borrowing by big tech companies for artificial intelligence (AI) investments. The iShares 20+ Year Treasury Bond ETF (TLT) dropped 0.8% on the 17th (local time), marking its lowest point since June 2004. The year-to-date decline has reached 6.6%. TLT is an ETF that invests in US Treasury bonds with maturities of 20 years or more, and as of July 31, its net assets stood at $41.54383 billion. The drop in long-term Treasury prices is linked to rising yields, as investors demand higher interest rates, leading to a decrease in existing bond prices. The US government continues to issue Treasury bonds to cover its fiscal deficit, which causes the market to demand a premium for locking up funds for longer periods. Big tech companies are projected to issue approximately $194 billion in bonds by 2026 for AI infrastructure investments, a 79% increase compared to 2025. AI infrastructure investments include data centers, semiconductors, and power facilities, with large tech firms often raising funds through corporate bond issuance. The trend of long-term US interest rates also affects Korean investors, potentially impacting the discount rate of dollar assets and the valuation of tech stocks. The impact of this decline in long-term bonds on cryptocurrency prices, such as Bitcoin and Ethereum, requires further investigation.

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