In general, if one is interested to invest in bonds, it is said best to avoid bonds (such as the TLT (which follows the 20-year Treasury bond) when interest rates are expected to be on the rise in the near future.

Currently the Fed is ‘fighting’ inflation by raising interest rates and today at the time of writing, the Cleveland Fed President Loretta Mester commented that “the Fed is still not even in restrictive territory on the Funds rate”, and ..“‘I’d still like to see long-term inflation expectations lower”, ..“also want to see continued progress on realized inflation”. 1

Having run a cycle analysis on the Producer Price Index by All Commodities as a means to look at inflation revealed that inflation may have seen the highest point (red composite cycle in below chart) already and that the Fed’s policy may actually work.

However, looking at above chart, the Fed may well be right that the fight for inflation is not over yet as the 15-year cycle may continue to rise for some time into next year, although most smaller cycles are on the downturn already. It may take a while before the longer-term 15-year cycle will turn over.

The continued expectation that the Fed may have to raise interest rates in the near future in general does not look good for iShares TLT - the 20+year Treasury Bond ETF.

In the last two weeks we have seen a lot of volatility in TLT that made me and some other premium subscribers interested what was happening on TLT. Has TLT made a bottom yet?

I do not have any professional qualifications in Economics. The world of inflation, interest rates may be difficult to grasp for many of us but all of us experience the effects in our day to day lives. So, this may be of interest to all of us and in this post I will be looking at the cycles and Gann timing lines to see where the trend in TLT seem to be heading to. The premium subscribers can read further in below post on this analysis looking at the longer and shorter trend and cycles in TLT.

Disclosure: No positions in TLT at the time of writing

This analysis is intended for general informational & educational purposes only. Hypothetical or simulated performance based on past cycles have many limitations. Cycles can contract, extend and invert. Hence, past performance is no guarantee for the future. No advice. Read our full disclaimer.

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