TLT has been a popular Treasury bond play for yield generation over the past few years after the Federal Reserve implemented near-zero interest rates and a robust bond purchasing program. However, TLT comes with a 17.72 year duration – a 1% increase in interest rates would translate to about a 17.72% decline in the fund’s price.
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If the Federal Reserve decides to raise interest rates following its meeting later this week, TBT would likely surge. Assuming that does not happen, TBT’s next catalysts could be election day or a December rate hike.
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ProShares UltraShort 20+ Year Treasury
Tom Lydon’s clients own shares of TLT.