The iShares 20+ Year Treasury Bond ETF (TLT) is experiencing upward momentum as a result of a softer-than-expected inflation report released on January 15, 2025. The Consumer Price Index (CPI) data showed a year-over-year increase of 2.9% in December, aligning with forecasts, but the core CPI, which excludes food and energy, rose by only 3.2%, slightly below the anticipated 3.3%. This has fueled expectations for Federal Reserve interest rate cuts, with the probability of a rate cut by June rising to 68% from 55% the previous day. Consequently, Treasury yields have fallen, with the 10-year yield dropping by 12 basis points to 4.68%, providing a boost to long-duration bonds like those tracked by TLT.
Additionally, the bond market has been buoyed by strong earnings reports from major banks, which have contributed to a rally in financial stocks and a broader market upswing. The decline in Treasury yields has been a key driver, as lower yields increase the attractiveness of long-term bonds. The market's anticipation of further rate cuts by the Federal Reserve has also played a significant role in the positive sentiment surrounding Treasury bonds, as investors seek to capitalize on potential price appreciation in a declining yield environment.
The iShares 20+ Year Treasury Bond ETF (TLT) rose to $86.78, marking a 1.75% increase as of 10:00 AM ET on January 15, 2025.