Should I Buy iShares 20+ Year Treasury Bond ETF (TLT)? Finance YouTuber Analysis

The YouTuber is buying more of the TLT ETF, expecting a turnaround in interest rates due to anticipated lower inflation data from the upcoming CPI report and potential de-escalation of geopolitical tensions. He believes these factors will ease pressure on the Fed, driving bond prices up and making the ETF a profitable buy by its August 21st expiration.

“I'm continuing to hold on to that and buying more because I think that turnaround in rates makes this one a very profitable buy that August 21st expiration.”

The YouTuber believes that the market is overestimating the likelihood and speed of Fed rate hikes. As the market realizes rates won't rise as fast as expected, bond prices, which move inversely to interest rates, will increase. This makes TLT an attractive investment, also offering a 4.5% dividend yield.

“The biggest return potential here is going to be in Treasury bond funds like the Eyeshares 20-year Treasury ETF, ticker TLT. That's because bond prices move opposite of interest rates. So, as interest rates come back down when the market realizes the Fed won't be hiking quite so fast, this TLT is going to go back up, adding to 4.5% dividend yield you'll also collect.”

The YouTuber recommends buying TLT as a hedge against a potential stock market downturn, noting that bond prices tend to rise when interest rates fall. He believes interest rates are likely to fall in the near future due to economic fears or potential changes in Fed leadership, which would benefit TLT. He also highlights its 4.5% dividend yield as a protective measure.

“I found a way to benefit in just about any scenario we see from this. The iShares 20 plus year Treasury bond ETF, the TLT, holds over $40 billion in long-term treasury bonds and pays a 4.5% dividend yield.”

The YouTuber recommends TLT as a safe place to put cash, offering a 4.3% dividend yield. He highlights its safety as a treasury bond ETF, suggesting it's a better alternative to low-yielding savings accounts for emergency funds or cash reserves.

“First one up here is going to be the Eyeshares 20-year Treasury Bond ETF. That ticker TLT. Now, this pays a 4.3% dividend yield. So, a solid dividend yield. These are treasury bonds. Okay, so these are the safest of the safe.”

The analyst is using a call spread strategy on TLT, betting that long-term interest rates will fall over the summer, causing the ETF's price to rise. He anticipates that economic weakness will force the Fed to cut interest rates, which would benefit bond prices and thus TLT. The strategy involves buying a $90 strike call and selling a $95 strike call expiring in August.

“While I think that higher inflation is coming, I also think the hit to the economy is going to force the Fed to lower interest rates and long-term rates are going to fall over the summer, taking that TLT higher again.”

The YouTuber considers the iShares 20+ Year Treasury Bond ETF (TLT) a smart play for a near-term swing lower in interest rates. He notes that interest-rate sensitive sectors like real estate and utilities have plunged due to rising rates, and it's difficult to see rates going much higher, making real estate stocks and TLT attractive.

“real estate stocks are still in very attractive territory and other rate bets you might want to look at here like the iar's 20-year treasury ETF that ticker TLT looking really smart here for a near-term swing lower in interest rates.”

The YouTuber recommends buying TLT, arguing that interest rates cannot stay at current high levels for long as they will choke the economy. He believes that when the Fed eventually cuts rates, TLT will jump, potentially offering a 12% return on top of its dividend.

“And when that happens the iar's 20-year treasury bond ETF ticker TLT will jump a move back to 4% on the treasury could send the TLT back up to $99 each for a 12% return on top of the 3.6% dividend you collect.”

The YouTuber advises against TLT, noting that while long-term bonds typically benefit from falling interest rates in a recession, interest rates are likely to rise in the coming year, which would negatively impact bond prices.

“For bonds, interest rates are likely to go up instead of down over the next year.”

The YouTuber suggests buying TLT as a safe haven when stocks are uncertain or going down. He advises accumulating it when its price is low, anticipating its role as a defensive asset.

“TLT will be one you can always go this route some ETFs are good as well know what I'm saying and so again be safe versus being risky all right to is one of those ones when this goes down you want to get this as well when you see it down anticipating what coach just told you.”