The hottest trade on Wall Street right now: "Bottom-fishing" in US long-term bonds.

With U.S. bond interest rates soaring to more than a decade high, the long-term Treasury bond fund, which has been hit hard, has become one of the hottest investments on Wall Street. On Tuesday and Wednesday alone, investors added more than $2 billion to the iShares 20 + Year Treasury Bond ETF, bringing its total year-to-date inflows to $21 billion. **Its fund share is near a 16-year low, its value has halved from its peak in 2020, and investors are pouring in. **This approximately $40 billion fund, or TLT, managed by BlackRock, is passively invested in long-term U.S. debt, which currently yields about 5%, comparable to 30-year U.S. debt. **It has taken in more money than any other fixed income ETF, second only to two equity funds. * *! Steve Laipply, global co-head of BlackRock fixed income ETFs, said:> Just in the past week we started to see inflows, and I expect this trend to accelerate as investors look for signs that yields may have peaked. It's not just BlackRock, but large institutions, including Pioneer and Pimco, are bottoming out U.S. debt. According to the Bank of America, **last week saw the largest weekly net inflow of U.S. debt funds ($9.2 billion) since the March 23 Silicon Valley Bank bankruptcy, with long-term U.S. debt funds having the largest net inflow on record ($5.6 billion). * *! Many investors are betting that **the U.S. economy is about to slow and the bond market's throes are nearing an end * *. They believe that soaring bond yields have pushed up borrowing costs and that the U.S. economy is unlikely to continue to grow at a high rate. **Wait until the broader economic market slows, that's when bonds bottom out. ## TLT: Traders' favorite tool **TLT has become the key for large and small investors to bet on the path of bond yields or simply increase their exposure to long-term bonds, and anyone with a brokerage account can buy shares in the fund. Simply put, the fund's size, liquidity and active options market make it a favorite tool for Wall Street traders, more convenient than buying and selling the underlying bonds outright. According to Dow Jones market data, 10 of the TLT's 12 most heavily traded days came after the last Fed meeting on September 20. Federal Reserve Chairman Jerome Powell recently hinted that rising long-term U.S. bond yields could call a halt to rate hikes. Powell will hold a press conference after the November meeting, when all eyes will be on him again for any clues on the path of interest rates. So far, however, those who bought TLT on dips have yet to see a return. In recent months, the fund has attracted a lot of long and short games. According to S3 Partners, TLT's short sellers have bet a total of $0.426 billion this year, and the fund is currently short-selling about 10% of its shares. Laipply added that the bulk of this year's TLT inflows are likely to come from investors looking to increase their fixed income exposure through higher yields. The U.S. bond market has just suffered its worst bear market in four decades. The Bloomberg Treasury Index has fallen since April, when a string of regional bank failures triggered a credit crunch and a warning of a recession. At the same time, the 10-year Treasury yield soared from a low of 3.25 percent in April to more than 5 percent, and the 30-year U.S. bond yield, which had been as low as 3.5 percent, recently broke the 5 percent mark.! A debt interest rate of around 5% provides investors with the highest source of bond income since 2007, helping bonds and stocks compete. Make the portfolio more resilient when risky assets are under pressure. Amy Xie, head of earnings strategy at Pendal Group, told the media Patrick that she is bullish on bonds given current yields. She believes that [inflation and economic growth are unlikely to accelerate again.] Mike Cudzil, portfolio manager of (https://wallstreetcn.com/articles/3700687) bond giant Pimco, also told the media:> Rising yields will eventually slow economic growth. We are ready to win once the economy starts to slow down. This year, analysts and economists have been anticipating a recession all year, but a slowdown has been absent. The relentless rise in yields has punished fixed-income investors who bet that 2023 will be a "bond year. But as the benchmark U.S. bond yield surged to 5%, confidence in the bond rally began to spread. EPFR data shows that weekly inflows into the U.S. long-term sovereign debt fund reached **** $5.7 **** billion in the seven days ending October 25 **, a record high. **** Long-term government bonds are traditional safe haven assets, and buying bonds is often seen as a safe bet in times of market volatility and geopolitical instability. * * Ales Koutny, head of the fixed income department of pioneer international, believes that from the perspective of pure risk return, allocating bonds is a meaningful choice:> I think the key to bonds at present is that only bonds can really protect your capital when the economic news really turns, such as the bank turmoil in Silicon Valley or the economic recession in March.