TLT and bond rates

[jonnyfrank]

I am seeking a brief explanation/education of how TLT might respond to bond rates. If rates continue to creep up on the 20 and 10 year bonds, is it possible for TLT to still go up? If so, how is this possible/probable?

Thanks in advance for any and all insight into this. I am not as familiar with bond market dynamics as some of you are and a flash course would be appreciated.

[scott]

I am seeking a brief explanation/education of how TLT might respond to bond rates. If rates continue to creep up on the 20 and 10 year bonds, is it possible for TLT to still go up? If so, how is this possible/probable?

Thanks in advance for any and all insight into this. I am not as familiar with bond market dynamics as some of you are and a flash course would be appreciated.

When looking at the iShares 20 Plus Year Treasury Bond (TLT) exchange-traded fund (ETF), one of the first points to consider is whether interest rates are likely to go up or down in the foreseeable future. The relationship between Treasury bond yields and interest rates is the key to its performance.

Generally speaking, if you expect that interest rates will rise in the future, it is best to avoid long-term bonds such as those that are tracked by the TLT. If that happens, you're locking in a lower interest rate.
https://www.google.com/search?q=how+TLT ... e&ie=UTF-8

[jonnyfrank]

Yes, that is generally the case. I am looking for other variables. I'm trying to figure out if I should slowly add more TLT or dump what I have. I do not think rates will be coming down anytime soon, and am left scratching my head why this was a buy recommendation here. I figure there must be some tidbit of knowledge I am missing.....

[SOL]

Yes, that is generally the case. I am looking for other variables. I'm trying to figure out if I should slowly add more TLT or dump what I have. I do not think rates will be coming down anytime soon, and am left scratching my head why this was a buy recommendation here. I figure there must be some tidbit of knowledge I am missing.....

There is an above-average possibility of a robust counter-rally, which could be even stronger than what most people anticipate. This is because bonds have experienced a more significant price collapse than previous market cycles. However, the counter-rally is likely to ultimately falter. Nevertheless, it should have sufficient strength to generate significant gains. A rally can be initiated without the need for interest rates to decrease. The key factor is the circulation and promotion of the idea that the era of rate hikes is coming to an end, coupled with big sharks moving into bonds, which will serve as the catalyst for such a rally.

[jonnyfrank]

SOL,

Thank you for that reply.

Why do you think the rally will not be sustainable? Are you thinking that rates are heading for 10% plus?

[George1010]

I suspect it might have something to do with the scenario regarding Real Inflation he spoke of in the last update.
Any thoughts on the Israel- Hamas situation

[SOL]

SOL,

Thank you for that reply.

Why do you think the rally will not be sustainable? Are you thinking that rates are heading for 10% plus?

Typically, but not always, a market that has been heavily attacked experiences a robust rally – one that surprises everyone with its strength. However, it eventually falters, undergoes a pullback, builds a stronger base, and then transitions into a long-term bull market phase.

Circumstances can change, and it seems that they might indeed change due to this new development in Gaza. This is discussed in greater detail in the just posted interim update.