SCHQ: Favorable Outlook For Long-Term Treasuries In 2026
The Schwab Long-Term U.S. Treasury ETF has delivered robust returns so far in 2025, benefitting from attractive current yields and capital gains amid falling interest rates. Looking ahead to 2026, I see room for further gains, as Fed rate cuts should more than offset a small acceleration in U.S. economic momentum. SCHQ may also provide trading opportunities for more proactive investors, as was the case in April 2025.
SCHQ: Limited Upside Amid Rising US Debt, Slower Rate Cuts
SCHQ's fund price has stabilized but remains rangebound due to the Federal Reserve's cautious rate cut approach amidst high U.S. government debt. The Federal Reserve's slow rate cuts, driven by high U.S. debt and potential inflation, limit SCHQ's capital appreciation prospects. Rising U.S. government debt and potential increased spending under the new administration will likely keep interest rates elevated.
Going Longer: Deeper Rotation Into Duration?
Investors took refuge in short-term Treasury bonds throughout 2023, where they reaped the rewards of higher-yielding money markets. Meanwhile, longer duration Treasuries have been mired in a bear market since 2020 but could finally start to see a reversal of fortune.
