Long Bond Resistance: Risk Appetite Signals
- Federal Reserve discussions and comments regarding interest rates have put long bonds and interest rates in the political spotlight.
- The performance of TLTs is frequently enough used to gauge risk appetite in the market.Analysts compare the performance of long bonds (20+ year bonds) to high-yield bonds and...
- Currently, long bonds are attempting to surpass the 23-month moving average on the monthly chart.
Long Bonds, Interest rates in focus Amid Fed, Political Commentary
Updated May 28, 2025
Federal Reserve discussions and comments regarding interest rates have put long bonds and interest rates in the political spotlight. Recent market activity shows a potential trend reversal after rising yields and a drop in the iShares 20+ Year Treasury Bond ETF (TLT).
The performance of TLTs is frequently enough used to gauge risk appetite in the market.Analysts compare the performance of long bonds (20+ year bonds) to high-yield bonds and the S&P 500 (SPY) to assess market sentiment. Monitoring monthly charts, notably the 23-month and 80-month moving averages, offers a longer-term viewpoint, reflecting business cycles.
Currently, long bonds are attempting to surpass the 23-month moving average on the monthly chart. A successful move could signal positive developments for sectors anticipating lower rates, including the Russell 2000 (IWM), small caps, regional banks (KRE), and semiconductors (SMH).However, it could also indicate increasing market fear.
A key price point for TLT to overcome is $100, a level of recent resistance. Analysis of the daily chart reveals a bottoming formation that occurred two days prior. Despite this, TLT continues to underperform the SPY and high yield bonds (HYG), suggesting the recent rally might potentially be short-lived.
ETF Summary
Key support and resistance levels for various ETFs:
- S&P 500 (SPY): Support at 575, resistance at 585.
- Russell 2000 (IWM): Above 225, targeting 227.
- Dow (DIA): Next target 435, support at 425.
- Nasdaq (QQQ): Pivotal support at 485, resistance at 500.
- regional banks (KRE): Holding above 60 is a positive sign.
- Semiconductors (SMH): Support at 242, resistance at 265.
- Transportation (IYT): Reaching all-time highs.
- Biotechnology (IBB): Support zone at 142,resistance at 146.50.
- Retail (XRT): Highest monthly close since 2022 at 78.99.
- iShares iBoxx Hi Yd Cor Bond ETF (HYG): Key support at 79.50.
What’s next
Investors should closely monitor TLTS ability to sustain gains above $100 and relative performance versus SPY and HYG to confirm the strength and durability of any potential rally in long bonds and assess the broader implications for market risk and sector performance.