Freedom 35 Blog: Could TLT Make a Big Comeback in 2025?

One of the more interesting developments in financial markets over the past few months has involved interest rates. As the Federal Reserve has lowered its short-term rates, long-term rates have trended higher. Typically, that’s the opposite of what should happen.

The 10-year U.S. Treasury even closed in on a 4.8% read at the start of 2025 before pulling back. What can investors expect from rates going forward?

First, it’s likely that traders were overly aggressive sending rates lower ahead of the Fed’s initial rate cuts. Now that the Fed has slowed the pace of its rate cuts, it’s clear that rates shouldn’t have declined as low as they have.

But it’s also clear that rates moved too high in response to that development. That suggests that investors may see rates tick lower in the months ahead. Cooler inflation or jobs data could also fuel a further move lower.

If that’s the case, then investors will want to own long-dated bonds. This can be done individually, or with ease with an ETF. One such ETF is the iShares 20+ Year Treasury ETF (TLT). TLT’s price should rise as yields fall, reflecting a rise in the price of the bonds in its portfolio.

TLT currently pays a 4.2% dividend, and the potential from capital gains as interest rates decline make it attractive.

To see the full analysis behind buying TLT now, click here.