The iShares 20+ Year Treasury Bond ETF (TLT) has remained in a tight range this week as investors assess the impact of tariffs on the economy and the upcoming actions of the Federal Reserve. TLT was trading at $86.57, inside the range it has been in the past few weeks and 5.5% above the year-to-date low.
iShares 20+ Year Treasury Bond ETF outflows are slowing
The TLT ETF has had over $2.8 billion worth of outflows this year a concerns about Donald Trump’s tariffs have remained. While it has shed assets in the past three consecutive weeks, the trend is improving.
Data shows that it shed $77 million in assets last week, better than the previous week’s outflows of $193 million and $379 million a week earlier.
A likely reason for this is that investors are changing their views about Donald Trump’s tariffs. While most of them expect the tariffs to the economy in the near term, there is hope that the tariff revenue will help to improve the US fiscal situation.
In a recent report, the Congressional Budget Office (CBO) estimated that these tariffs will help to reduce the US budget deficit by about $4 trillion in the next ten years, and help to offset the impact of Trump’s tax cuts. The CBO estimated that Trump’s tax cuts will boost the country’s borrow by $4.1 trillion in this period.
Still, it is unclear whether these tariffs will exist in the long term as two US courts have found them illegal as they did not involve Congress. Trump hopes that the Supreme Court will solidify the tariffs. In a recent statement, an analyst at Macuarie said:
“If the bulk of Trump’s tariff programme is nullified by the courts some analysts will cheer, inflation will subside, growth may improve, and the Fed may be more inclined to ease monetary policy. But if the focus is on debt and deficits at that time, the bond market may riot.”
The TLT ETF has reacted to the recent performance of the bond market, which is a reflection on the state of tariffs on beefing the finances. The 30-year yield moved from 5.152% in March to the current 4.893%.
The next important catalyst for the TLT ETF is the upcoming US nonfarm payroll (NFP), which will impact the next action of the Federal Reserve. Analysts expect the Fed to cut interest rates, which may impact shorter and longer-term bond yields.
TLT ETF stock price technical analysis
The weekly chart shows that the TLT ETF has remained in a tight range in the past few months. It was trading at $86.57, down 12% from the highest point last year.
The stock has formed a symmetrical triangle pattern and has moved slightly below the 50-week and 100-week moving averages. The two lines of the triangle are nearing their confluence level.
Therefore, the most likely scenario is where the TLT ETF remains in this range for a while. The stock will then have a bearish breakdown, possibly to the psychological point at $80.
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