TLT: Buy the Dip vs. Sell the Rip
The $iShares 20+ Year Treasury Bond ETF(TLT)$
Initially, the $iShares 20+ Year Treasury Bond ETF(TLT)$ fell more than 1.0%, but rallied 1.5% within an hour, only to fall back into negative territory by midday.
The labor market report showed 216,000 new jobs, beating estimates and indicating continued economic growth. However, 71,000 jobs from previous months were also revised downwards, keeping leaving the unemployment rate at 3.7%.
Investors who were initially uncertain about the Fed's stance tended to buy, but concerns about a continued high-interest rate scenario prompted some to sell, eroding the morning's gains.
December data points to a slowdown in the economy, possibly pointing to a soft landing in 2024. However, given the slower growth last year compared to 2022, a recession cannot be ruled out.
This Thursday, we will continue to pay attention to the December CPI data. Economists expect the CPI data to increase for the first time since July, which may put pressure on the U.S. dollar $USD Index(USDindex.FOREX)$ and U.S. Treasuries.
The bond market is expecting more significant interest rate cuts than forecast by the Fed, indicating a less optimistic view of the economy. Even if the significant rise in $iShares 20+ Year Treasury Bond ETF(TLT)$ in 2023 may seem exaggerated in hindsight, bond investors remain wary of a possible recession in 2024 , in contrast to the optimistic outlook for a soft landing.
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