Two of Wall Street's best-known investors are worried about long-term government bonds. And it's about more than just government debt. On October 13, Bridgewater founder Ray Dalio wrote that the bond bear market “probably has a long way to go.” In other words, he thinks bond prices will keep falling. The same day, Paul Tudor Jones told CNBC there’s about a 60% chance that markets are heading for serious trouble.
Their worry is the same. The U.S. government has to borrow a lot of money. At the same time, some of the usual buyers of its bonds are pulling back.
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AI Borrowing Adds to the Pressure
Here’s what I found most surprising. AI companies are borrowing heavily too, so they can pay for new data centers. And that borrowing is growing fast. Dalio said big AI companies sold about $220 billion of bonds in the first half of 2026. That’s more than double the $108 billion they sold in all of 2025. Jones made the same point. He said the race between AI spending and government borrowing could push markets over the edge. That's bad news for bonds. When borrowers chase the same investors, they have to pay more interest to win them over. Higher rates make older bonds worth less. That’s exactly what has dragged down the iShares 20+ Year Treasury Bond ETF (TLT) this year.
Not everyone is nervous, though. Goldman Sachs CEO David Solomon said on the bank’s earnings call that a 5% 10-year Treasury “doesn’t scare me.”
I think both sides could be right. Rates may keep rising for a while. But TLT already pays a yield of about 5.5%, so investors get paid well while they wait. If you can handle some ups and downs, this could be one of the better times in years to buy.
About iShares 20+ Year Treasury Bond ETF
The iShares 20+ Year Treasury Bond ETF tracks U.S. government bonds that mature in more than 20 years. It holds 47 bonds, manages about $48.6 billion in assets, and charges a 0.15% annual fee. It pays income monthly, with a 30-day SEC yield of 5.54%.
Year-to-date, TLT’s price is down about 10%, and the fund currently trades near its 52-week low of $76.43. That follows a long, rough stretch. TLT fell about 31% in 2022 alone, when the Fed raised rates sharply.
www.barchart.comWhat TLT Depends On
TLT is about as simple as an ETF gets. Every holding is a long-term U.S. Treasury bond, so the risk of default is very low. TLT's price mostly depends on interest rates. When rates rise, the bonds it holds become less valuable, so TLT falls. And because its bonds won't pay back for 20 years or more, TLT drops more than funds holding shorter-term bonds. That’s why the supply concerns Dalio and Jones raise matter so much here. TLT is really a bet on whether demand for bonds can keep up with all the borrowing. It suits investors who believe growth will slow and yields will eventually fall, since TLT would gain the most in that scenario. Others hold it for steady monthly income.
How TLT Compares With TLH
The iShares 10-20 Year Treasury Bond ETF (TLH) offers a middle ground. It holds Treasuries maturing in 10 to 20 years, so it reacts less to rate changes. That has helped only a little this year. Including interest payments, TLH is down about 6.3%, compared with about 7.4% for TLT. The tradeoff is income. TLH’s 30-day SEC yield of 5.45% is slightly lower than TLT’s 5.54%. For investors who share Dalio’s worries but still want long-term bond income, TLH gives up a little yield for less risk. Those who expect rates to fall soon may prefer TLT for its bigger potential rebound.
On the date of publication, Jabran Kundi 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.
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