The day before the US Treasury Department took action, a mysterious fund aggressively bought $123 million worth of Long-Term Treasury Bond ETF.

BlockBeats News, August 20th, amidst a rapid rise in U.S. Treasury yields, one or more investors significantly increased their holdings in a U.S. Treasury ETF highly sensitive to long-term interest rate changes the day before the Treasury Department announced an expansion of its buyback program.

The $1.5 billion Pimco 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ) received a net inflow of $123 million on Tuesday, marking a historic high for the fund; with a trading volume of 5.2 million shares, nearly double the previous peak set in 2024.

ZROZ primarily invests in Separate Trading of Registered Interest and Principal Securities (STRIPS), which are zero-coupon securities created by the separation of the principal and interest payments of Treasury bonds. The fund has an effective duration of approximately 28 years, meaning that if the yield were to drop by one percentage point, its bond prices would theoretically rise by around 28%, making it essentially a highly interest rate-sensitive tool betting on U.S. long-term rate changes.

The fund surged 3.2% on Wednesday, marking its largest single-day gain since November 2024.