In November, long-term bond ETFs, such as the iShares 20+ Year US Treasury ETF (TLT), experienced significant gains of 9% or more as yields dropped, moving in the opposite direction as bond prices. Investors who were willing to take on more risk with ultra-rate-sensitive bond ETFs like the Pimco 25+ Year Zero Coupon US Treasury Index ETF (ZROZ) enjoyed even more substantial price gains, with a whopping 15% increase in November. This performance outpaced the stock market’s gain of 10%, as measured by the SPDR S&P 500 ETF Trust (SPY).
TLT Big Move in November
ETF Newz Says:
Looking ahead to 2024, historical data suggests that it may be a positive year for TLT and the broader bond market. Bond prices have risen 100% of the time in the year following two consecutive years of negative returns since 1928. The extent of price appreciation in bonds for 2024 will depend on various factors, including inflation and the growth rate of the U.S. economy. If there is a soft landing or slower growth without a recession, bond prices may not appreciate significantly. However, in the event of a recession, the Federal Reserve may lower interest rates, leading to higher bond prices.