Karmaziene, E. and Terrada, JuanM. (2026). Fast ETFs, slow bonds: Price adjustment under monetary tightening Finance Research Letters, 90(February):1--7.

Understanding how monetary policy transmits into credit markets is a central question in finance, yet the role of bond exchange-traded funds (ETFs) in this process remains unclear. We study U.S. corporate bond ETFs during the 2022-2023 tightening cycle and ask whether interest rate changes generate deviations between ETF prices and net asset values (NAVs), and how persistent these deviations are. We find that rising yields systematically widen discounts, but only in high-yield ETFs. The effects are economically meaningful: a one-standard-deviation increase in short-term yields lowers the probability of an ETF trading at a premium by over two percentage points. Discounts, however, vanish quickly. The pattern is consistent with NAVs adjusting slowly due to infrequent bond trading, while ETFs reprice immediately. The results highlight the role of ETFs as efficient conduits between policy and credit pricing.