Credit Spreads At Historical Lows, TLT Vs. VCLT
TLT and VCLT historically move together with ~90% correlation. Recently, a clear divergence has opened, with VCLT outperforming. Such market dislocations are rarely permanent and tend to revert.
TLT: Rate Expectations Down And Yields Up? It's All About The Term Premium
The TLT tracks the performance of long-term Treasury bonds, which appear to be losing their safe haven status. Recent weakness reflects the rising term premium owing to increased uncertainty over long-term interest rates. While posing a short-term risk, this rising term premium will increase long-term returns.
TLT: Trump Is Right About Interest Rates, So It's Time To Back Up The Truck
I see TLT's current price and nearly 5% yield as an attractive buying opportunity with limited long-term risk, despite concerns about U.S. debt. Lower interest rates are likely coming soon, either from Fed policy shifts or a recession, which could drive significant gains for TLT. Fears about U.S. government creditworthiness are overblown. The U.S. remains a superpower with multiple tools to manage debt and raise revenue.
TLT: Staying Bullish After Its Latest Surge
We see the fiscal risk premium as being priced in and think the iShares 20+ Year Treasury Bond ETF can tap into lucrative longer-term key rates. Our short-term forecast for the yield curve is bullish flattening, TLT ETF's effective duration of 15.68 means the ETF might benefit from such a scenario. The on-the-run coupon base is set quite high for 20-year+ Treasuries. Therefore, we see short-term distributions being sustained at decent levels.
RFIX: Taking The Bond Bull ETF By The Horns
The Simplify Bond Bull ETF is "151 proof" duration, and carries 3x the interest rate sensitivity of 20-year bond funds like TLT. This gives investors direct access to the "duration trade," where investors profit if interest rates fall, one of the investment theses behind TLT and other long bond funds. RFIX does pose a lot of risk, as it is very volatile and highly responsive to interest rate changes, making it a fund that investors should consider carefully.
TLT: 5% Yield Now Outpaces Equity Earnings Yield, With Higher Term Premium Embedded
TLT's recent sharp selloff has priced in some fiscal deficit concerns, with 2-20 yield spread widening to 100 bps, indicating the current yield has embedded higher term premium. TLT has reached a 5% yield, surpassing the S&P 500's 4.7% earnings yield due to the recent V-shaped rebound in the equity market, as the market priced out recession risk in 2025. With yields nearing the 5.25%–5.5% resistance range, dip buyers may step in as cooling inflation makes further Fed hikes unlikely.
TLT: Doubling Down On Our Bullish Outlook
A fundamental analysis paired with a modelling process suggests longer-term yields remain overzealous. We think iShares 20+ Year Treasury Bond ETF can benefit if the market wakes up to the realities of lower justified real rates, lower term premiums, and the convexity-conducive environment. CDS and residual risk premiums were incorporated in our modelling process. In addition, history and UBS show that a ratings-based adjustment of a 10-15 basis point yield increase is justified.
TLT Vs. VCTL: Yield Spread Is Near 10-Year Low
The dividend yield spread between Vanguard Long-Term Corporate Bond Index Fund ETF Shares and iShares 20+ Year Treasury Bond ETF is currently near a 10-year low. This signals an unusually unfavorable return/risk ratio for VCLT relative to treasury bonds. To further compound the downside risks, VCLT has significant exposure to medium-quality corporate debt.
Reap the Benefits of Low ETF Expense Ratios Over Time
When it comes to cost savings on fixed income ETFs, Vanguard is head-and-shoulders above competitors. But it can be easy to get up caught in the low expense ratio game.
TLT: Inflation Sparks A Unique, Huge Upside Play - Low-Risk, But Fleeting
With today's interest rate and inflation setup, historical patterns suggest TLT could soar over 50% from current levels. But there's a catch - one popular indicator might lead investors astray. On their own, interest rates and inflation don't offer clear entry signals. But when combined, they form a powerful indicator.
ETFs to Play Amid Long-Term Yields' Best Week Since 1982
Fears of China selling U.S. treasuries, inflation risks, a less-dovish Fed, and the unwinding of basis trade hit the U.S. treasury market. These ETFs can come to your rescue.
Technical Note: Market Poised To Rebound?
EPS season is starting soon, AI investments continue at high rates. Jobs & Durables show the economy isn't stalling. Tech Valuations are down significantly vs. growth rates.
