For most of the past five years, bonds have been in a brutal bear market.
Since peaking on March 9, 2020, the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) — the world’s largest fixed-income ETF — has lost nearly 50%, battered by tight monetary policy, strong economic growth and persistent inflation.
Yet, fresh reversal signals have started emerging as the first quarter of 2025 draws close.
The gauge tracking longer-dated Treasury securities jumped 4.2% in the first quarter. In contrast, the SPDR S&P 500 ETF Trust (NYSE:SPY), a benchmark for U.S. stocks, fell 5% over the same period.
That 9% performance gap favoring bonds over stocks is the largest in a single quarter since April 2020.
TLT Notched Strongest Outperformance Over S&P 500 Since Q1 2020
Why Are Bonds Suddenly Back?
Kent Thune, a CFP and investment advisor for ETF.com, believes the answer may lie in the shifting consumer confidence.
“Weren’t bond prices supposed to fall amid the inflationary potential of tariffs, tax cuts and deportations? What explains TLT’s unexpected performance? The short answer is consumer confidence,” Thune said.
Indeed, consumer sentiment is deteriorating rapidly. This signals that households may begin to reduce spending. That’s a troubling sign for a …Full story available on Benzinga.com
