Investors Piled Into Long-Term Treasury ETFs Ahead Of Moody's Downgrade: Will Confidence Hold?

Investors poured over $2.5 billion into long-dated U.S. Treasury ETFs last week ahead of Moody’s downgrade of the U.S. credit rating to Aa1, according to Benzinga. The iShares 20+ Year Treasury Bond ETF led inflows with $2.07 billion, its biggest weekly haul since November 2024. Leveraged and zero-coupon funds like Direxion’s TMF and PIMCO’s ZROZ also saw their strongest inflows in months. The surge came amid a risk-on environment, driven by cooler inflation data, U.S.-China tariff cuts, and expectations of rate stability. Markets stayed calm on Monday as the 30-year Treasury yield briefly rose above 5% before settling at 4.92%, and the TLT ETF dipped just 0.3%, showing no signs of panic selling. Year-to-date, however, TLT still faces $1.2 billion in net outflows.