SPSB: Duration Bets Not Paying Off In Bond Sell-Off
The State Street SPDR Portfolio Short Term Corporate Bond ETF (SPSB) is currently facing challenges due to rising benchmark rates and ongoing inflation risks. With a duration of 1.8 years, the ETF is susceptible to capital depreciation as yields for 2-5 year bonds have increased significantly. Additionally, the decline in credit spreads seems unwarranted given the negative consumer sentiment and inflationary pressures affecting corporate profits.
- ▪SPSB is vulnerable to capital depreciation due to rising benchmark rates.
- ▪The ETF has a duration of 1.8 years, making it sensitive to interest rate changes.
- ▪Recent upward revisions of over 50 basis points in yields for 2-5 year bonds have impacted SPSB.
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