Rising Treasury Yields Push Gold and High-Yield Bond ETFs Lower
Gold fell 4% as Treasury yields climbed, while options activity showed bullish positioning in GLD and heavier bearish exposure in HYG.
Gold and high-yield corporate bond ETFs fell Monday as Treasury yields climbed, but options activity showed traders positioning for a potential recovery in gold while maintaining a more bearish stance on high-yield debt.
Gold dropped 4% to its lowest level since the first week of August as the 10-year Treasury yield reached 5.3% and the 30-year yield touched 5.4%.
The SPDR Gold Shares (GLD) recorded roughly twice as many call trades as puts. More than 68,000 calls were likely bought, compared with fewer than 32,000 puts. Net trade sentiment was bullish by almost $2.8 million, with an imbalance of 105,000 deltas favoring bullish positions.
The biggest single GLD trade was the sale of 2,000 $375-strike puts expiring in January 2028, valued at $5.9 million. GLD traded mostly between $370 and $380 during the summer.
High-yield bonds faced heavier bearish positioning. The iShares iBoxx High Yield Corporate Bond ETF (HYG) extended a five-day decline to its lowest level since April 2025.
HYG options volume exceeded 2.5 times its 30-day average Monday, with more than 2.5 times as many puts as calls. About 52,000 puts were likely bought, compared with slightly more than 15,000 calls. The most frequently purchased contract was the $78 put expiring Nov. 20.
The 10-day correlation between GLD and the 10-year Treasury yield was negative 0.8, while HYG’s was negative 0.99. Both ETFs therefore moved inversely with the 10-year Treasury yield over that period.
“Sentiment in high-yield bonds has been very complacent and the risk of defaults is probably much higher than the market anticipates,” said Nigam Arora, founder of The Arora Report. “A lot of these are on variable rates and debt is coming due next year.”
