Trump's Trade War Boosts TLH as Inflation Surges

Despite rising inflation and a trade war, investors are considering long positions on iShares 10-20 Year Treasury Bond (NYSEARCA:TLH) as a core portfolio holding due to the potential for a more dovish Federal Reserve and the bond's historically low volatility.

Despite rising inflation and ongoing trade tensions, investors are increasingly considering long positions on the iShares 10-20 Year Treasury Bond (NYSEARCA:TLH) as a core portfolio holding. This strategy is driven by the potential for a more dovish Federal Reserve policy and the bond's historically low volatility.

On July 2, 2025, the S&P 500 inched higher as President Donald Trump indicated openness to negotiating trade deals, including with major trading partners like the European Union. This statement has reinforced investor optimism that a global trade war may be averted [1]. The Dow Jones Industrial Average gained 77 points, or 0.2%, and the S&P 500 index was 0.2% higher, while the NASDAQ Composite gained 0.4%. Trump's remarks came after sending letters over the weekend outlining trade tariffs, but he signaled that these letters are opportunities for trading partners to make a deal [1].

Recent data showed U.S. customs duty collections surged to a record-high $113.3 billion gross in the first nine months of fiscal 2025, and Treasury Secretary Scott Bessent projected this figure could reach $300 billion by December. This represents a significant source of fiscal revenue for the government [1].

The focus this week is on consumer price index inflation data for June, due on Tuesday, and the new quarterly earnings season. The June U.S. consumer price index is expected to show a monthly rise of 0.3% in June, a rise from the 0.1% increase in the prior month, while the annual release is seen climbing to 2.6%, from 2.4% in May. At its gathering in June, the U.S. central bank chose to leave borrowing costs unchanged at a target range of 4.25% to 4.5%, but Fed fund futures indicate a slim chance of a rate cut at the end-July meeting, but suggest easing in September is likely [1].

Investors are looking for opportunities to mitigate the impact of rising inflation and trade uncertainties. The iShares 10-20 Year Treasury Bond (NYSEARCA:TLH) is an attractive option due to its low volatility and potential for capital appreciation as interest rates decline. The bond's duration makes it sensitive to changes in interest rates, which could benefit investors if the Federal Reserve adopts a more dovish stance [2].

In conclusion, the iShares 10-20 Year Treasury Bond (NYSEARCA:TLH) offers a potential hedge against rising inflation and trade uncertainties. As investors seek stable returns in an uncertain market, this bond provides a low-risk option with the potential for capital appreciation.

References:
[1] https://news.az/news/s-p-500-higher-as-trump-says-open-to-deals-on-tariffs-easing-trade-war-fears
[2] https://sg.finance.yahoo.com/quote/IAF.XA/performance/