In a February 4, 2025, Barchart article, I asked if U.S. long-term interest rates had peaked. I concluded:

The bond market is at a critical level, remains in a bearish trend, and is not far from a challenge of the October 2023 low. Bullish and bearish factors continue to pull the long bond futures and TLT ETF in opposite directions in February 2025. They will eventually break higher or lower, but the path of least resistance for a potential up or downside breakout is not clear in the current environment. We could see lots of volatility in the bond market over the coming months as we find out if U.S. interest rates have peaked or if they have further upside.  

On February 3, 2025, the nearby U.S. 30-year Treasury bond futures were at the 114-23 level, with the TLT ETF at $88.29 per share. In March 2025, the bonds and TLT were higher. 

Bonds rally in early 2025

The long-bond futures have been making higher lows and higher highs since the mid-January low. 

The daily chart since the beginning of 2025 shows the rally from the January 14 110-13 low to the most recent 119-18 March 4 high. 

The rally in the bond market has caused mortgage rates to decline and has given time for the Fed’s recent rate cuts to filter through the economy. The Fed has not cut rates in 2025 as inflation data remains elevated. However, long-term rates have stabilized. 

The TLT follows the long bond futures

The iShares 20+ Year Treasury Bond ETF product (TLT) chart has followed the same path. 

The daily TLT chart illustrates the rise from the $84.89 low on January 14 to the most recent $92.79 per share high on March 4. 

While the short-term trends in 2025 have been higher, the long-term trends since the 2022 high remain bearish. 

The monthly continuous contract long bond futures chart shows that the trend has remained lower since the 2020 high. 

The monthly chart of the TLT ETF product highlights the same bearish trend. 

 

Inflation remains elevated- Bearish for bonds

The following factors favor the downside in bonds and the TLT ETF in March 2025:

• Inflation remains elevated above the Fed’s 2% target.
• Tariffs have caused price distortions in raw material markets, causing some price increases.
• U.S. debt at over $36.5 trillion remains negative for the bond market.
• Geopolitical uncertainty increases risk levels in markets across all asset classes. 

These and other factors have caused the long-term trends in the long bond futures and TLT ETF to remain bearish in 2025. 

Oil prices are under pressure- Bullish for bonds

The following factors suggest that we may have seen bottoms in the long bond futures and TLT ETF product:

• Crude oil continues to be the energy commodity that powers the world. While core inflation data excludes volatile food and energy prices, crude oil is critical to most goods and services. Crude oil prices recently made new lows for 2025 and are approaching technical support at the May 2023 $63.64 low on the nearby NYMEX petroleum futures. Falling oil prices could lower inflationary pressures, causing bonds to rally.
• The Trump administration has stated its intention to lower long-term interest rates through its policy initiatives.
• Record highs in the stock market over the past weeks and the recent correction could cause capital to flow from stocks to bonds as the latter offers attractive yields. 

 

The recent short-term bond rally and TLT ETF could be the beginning of a rally that challenges technical resistance levels. 

Levels to watch in the long bond futures and TLT ETF product

Technical analysis outlines the critical levels for the bond futures and TLT ETF. 

The five-year long bond futures chart shows that technical support is at the October 2023 107-04 low. The first technical resistance level that would end the long-term bearish path of least resistance since the 2020 high is at the September 2024 127-22 high. 

The five-year TLT chart highlights technical support at the October 2023 $82.42 low, with resistance at the September 2024 $101.64 per share high. 

The five-year charts illustrate that the bonds and TLT ETF have been in sideways trading ranges since the October 2023 low. Bullish and bearish factors are pulling government debt in opposite directions. While the short-term trend is positive, it will take a move above 127-22 in the bonds and $101.64 in the TLT to reverse the bearish paths of least resistance that have gripped the long-term debt markets over the past five years. 

On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.