The Quiet Comeback: Why TLT Deserves a Spot on Your Radar

by Joe Casey - April 16, 2025

In an environment where monetary policy hangs in limbo, few instruments are as sensitive—or potentially as explosive—as long-duration Treasurys. The iShares 20+ Year Treasury Bond ETF (TLT) has long been a bellwether for interest rate expectations, and its chart tells a clear story: when interest rates fall, TLT rises. When rates rise, TLT falls. It’s that simple.

Overlay a chart of the 10-year yield (in blue) and TLT (in orange), and the inverse correlation becomes unmistakable.

As markets digest the broader shift from globalism to a domestically focused economy under Trump’s renewed economic agenda, it’s crucial to separate two often-conflated entities: the economy and the stock market. While the market has taken a beating in recent months, economic indicators are quietly improving. Jobs reports are stronger, and inflation data is coming in better.

But here’s the rub: fundamental economic realignments tend to rattle markets before the dust settles. And we’re in the thick of it now. While the Fed has maintained its stance of “higher for longer,” history suggests this won’t last forever. Eventually, the Fed will pivot—because it always does.

And when it does, interest rates will fall.

That’s where TLT comes in. Once the rate cycle turns, TLT isn’t just a defensive play—it’s a spring-loaded opportunity. Volume has been steadily building, a telltale sign that institutions are quietly accumulating positions in anticipation of a reversal.

For those who’ve implemented our Portfolio Insurance strategy—buying long-dated, out-of-the-money call options on TLT—this is precisely the type of scenario we prepare for. These contracts, designed as low-cost hedges, are structured not to pay off every year, but to provide significant upside in years when the unexpected becomes reality.

The goal isn’t to bet the farm—it’s to insure it.

That’s why we recommend keeping the allocation tight: around $3,000 for average-size portfolios, and up to $5,000 for larger accounts. If rates remain elevated, the options expire worthless—just like a standard insurance policy. But if the market falters and the Fed intervenes, these options can surge in value, offsetting portfolio losses and delivering asymmetric returns.

In this market, greed can be just as dangerous as fear. Stay disciplined. Stay hedged. And keep an eye on TLT—it might just be the most overlooked opportunity of the year.

You can download our "Portfolio Insurance"  eBook at www.CatalystWealthCoaching.com