Long-term Treasury bonds are gaining renewed interest due to potential rate cuts and lower inflation levels. Treasury bonds offer steady income, safety, and hedging capacity in a portfolio. Recent market conditions suggest Treasury bonds, including the iShares 20+ Year Treasury Bond ETF, may perform well in the coming months.
The iShares 20+ Year Treasury Bond ETF had its best week in 2024, and is up over 7% in two weeks. The Fed's shift in focus to labor market followed by a very weak jobs report opens up the potential for aggressive rate cuts into 2025. TLT can be expected to challenge $100-100.5 area and $109 later this year.
Investors have been pouring into bond funds this year as interest-rate cuts begin trickling out from global central banks.
TLT offers exposure to long-term U.S. Treasury bonds with extended duration. TLT provides a favorable return/risk profile under current conditions. The current inflation data and future contracts both point to lower rates.
TLT may face near-term volatility due to inflation and economic data, but long-term trajectory could be impacted by treasuries issuance and demand. Inflation is slowing down, with the Fed conservatively projecting only one rate cut in 2024 if inflation continues trending towards 2%. Recent economic data shows potential weakening, with job numbers and consumer sentiment softening, which could benefit TLT in a hard landing scenario.
Bullish evidence from technical analysis and fundamental reasons suggest bonds are poised for gains as the economy slows and the Fed leans towards cuts. TLT is a good fund to position for the rally due to its position on the yield curve and high duration. The rally should surpass $100 and could reach $109 at the 2023 high.
Investors know the Federal Reserve WON'T cut rates when this week's policy meeting wraps up on Wednesday. But that doesn't mean the Great Rate Debate is settled.
Recent economic data supports a bullish view of long-term US bonds. The structural argument for high debt and deficit sustainability driving thesis. Introduction of a low-cost alternative to TLT - Schwab Long-Term U.S. Treasury ETF.
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Long-term treasuries are attractive due to structural economic challenges and signs of inflation relief. Recent negative macro surprises have added fuel to the bull case, while the technical picture has improved. Factors such as declining real-time inflation, a decline in crude oil prices, and double relief from the Federal Reserve and US Treasury support a bullish view on long-term bonds.
Long-term treasuries have been under pressure, but there could be a softening trend in interest rates in the short term. The Federal Reserve scaling back its quantitative tightening program and the US Treasury's buyback program have not helped bond markets as expected. The US Government's large deficit and increasing debt levels are putting downward pressure on bonds, but interest rates need to come down for long-term debt sustainability.
The iShares 20+ Year Treasury Bond ETF (TLT) has come under pressure in the past few years as concerns about the US public debt have remained. Its stock has plunged by over 40% from its all-time high of $162.97 to the current $90.