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The Zacks Analyst Blog Highlights ProShares UltraPro Short 20+ Year Treasury ETF, Direxion Daily 20+ Year Treasury Bear 3x Shares, Direxion Daily 7-10 Year Treasury Bear 3X Shares, ProShares UltraShort 20+ Year Treasury ETF and ProShares UltraShort 7
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For Immediate Release
Chicago, IL – March 3, 2023 – Zacks.com announces the list of stocks and ETFs featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: ProShares UltraPro Short 20+ Year Treasury ETF (TTT - Free Report) , Direxion Daily 20+ Year Treasury Bear 3x Shares (TMV - Free Report) , Direxion Daily 7-10 Year Treasury Bear 3X Shares (TYO - Free Report) , ProShares UltraShort 20+ Year Treasury ETF (TBT - Free Report) and ProShares UltraShort 7-10 Year Treasury (PST - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Inverse Treasury ETFs Soar as Yields See Big Monthly Gain
Treasury yields logged the biggest monthly gain in February since September and October on prospects of tighter monetary policy for longer than expected. The 10-year yields topped 4%, marking the highest level since November, while 2-year yields reached its highest level since November to about 4.8%. The 6-month yield rose to above 5%, just shy of its highest level since Mar 12, 2007 (read: Rising Rate ETF Outperforms in February: Here's Why).
This has led to a spike in ETFs that bet against U.S. Treasury bonds.
Inverse ETFs provide opposite exposure that is a multiple (-1X, -2X or -3X) of the performance of the underlying index using various investment strategies, such as swaps, futures contracts and other derivative instruments. These ETFs could be worth buying for huge gains in a short span arising from rising yields.
The rise in yields came on the back of a series of solid economic data, which has rekindled concerns that interest rates could keep climbing for longer than anticipated. This is especially true as U.S. consumer spending increased the most in nearly two years in January and retail sales also increased the most in nearly two years in January after two straight monthly declines.
Hiring surged with the economy adding a solid 517,000 jobs in January. The unemployment rate fell from 3.5% to 3.4%, the lowest since 1969. Business activity unexpectedly rebounded in February, reaching its highest level in eight months.
The housing market is showing signs of improvement. U.S. builder confidence has risen for the second consecutive month to the highest level since September 2022. Signed contracts to buy existing homes in the United States rose the most since June 2020 in January.
Meanwhile, the Fed’s preferred inflation gauge accelerated in January at its fastest pace since June, while the consumer price index jumped 0.5% in January following a 0.1% increase in December. Both gauges have shown rising inflation and will thus prompt the central bank to raise interest rates to an even higher peak level and hold them there through the year (read: PCE Inflation Jumps the Most Since June: 5 ETFs to Play).
According to the CME FedWatch tool, markets are pricing in a 76.7% probability that the Fed will raise interest rates by 25 bps to a range of 4.75% to 5% on Mar 22.
ProShares UltraPro Short 20+ Year Treasury ETF
ProShares UltraPro Short 20+ Year Treasury ETF also offers three times the inverse performance of the same index. It has AUM of $371.5 million and an average daily volume of roughly 97,000 shares. The expense ratio comes in at 0.95%.
Direxion Daily 20+ Year Treasury Bear 3x Shares
Direxion Daily 20+ Year Treasury Bear 3x Shares offers three times the inverse exposure to the same ICE U.S. Treasury 20+ Year Bond Index. With AUM of $514.2 million, Direxion Daily 20+ Year Treasury Bear 3x Shares charges 88 bps in fees and trades in a solid volume of 320,000 shares a day on average.
Direxion Daily 7-10 Year Treasury Bear 3X Shares
Direxion Daily 7-10 Year Treasury Bear 3X Shares provides three times the inverse performance of the ICE U.S. Treasury 7-10 Year Bond Index. It charges 95 bps in annual fees and trades in an average daily volume of roughly 74,000 shares. Direxion Daily 7-10 Year Treasury Bear 3X Shares has accumulated $30 million in its asset base.
ProShares UltraShort 20+ Year Treasury ETF
ProShares UltraShort 20+ Year Treasury ETF seeks two times the inverse daily performance of the ICE U.S. Treasury 20+ Year Bond Index. It is the most popular and liquid ETF in the inverse Treasury space, with AUM of $744.2 million and an average daily volume of 3.1 million shares. ProShares UltraShort 20+ Year Treasury ETF charges 89 bps in annual fees.
ProShares UltraShort 7-10 Year Treasury
ProShares UltraShort 7-10 Year Treasury seeks to offer two times the inverse the daily performance of the ICE U.S. Treasury 7-10 Year Bond Index, charging 95 bps in annual fees. With AUM of $47.4 million, the fund trades in a volume of 67,000 shares a day on average.
Bottom Line
As a caveat, investors should note that such products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing — when combined with leverage — may force these products to deviate significantly from the expected long-term performance figures (see: all the Inverse Bond ETFs here).
Still, for ETF investors who believe that yields will continue to rise, any of the above products could make an interesting choice. Clearly, a near-term short could be intriguing for those with high-risk tolerance and a belief that the trend is the friend in this corner of the investing world.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights ProShares UltraPro Short 20+ Year Treasury ETF, Direxion Daily 20+ Year Treasury Bear 3x Shares, Direxion Daily 7-10 Year Treasury Bear 3X Shares, ProShares UltraShort 20+ Year Treasury ETF and ProShares UltraShort 7
For Immediate Release
Chicago, IL – March 3, 2023 – Zacks.com announces the list of stocks and ETFs featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: ProShares UltraPro Short 20+ Year Treasury ETF (TTT - Free Report) , Direxion Daily 20+ Year Treasury Bear 3x Shares (TMV - Free Report) , Direxion Daily 7-10 Year Treasury Bear 3X Shares (TYO - Free Report) , ProShares UltraShort 20+ Year Treasury ETF (TBT - Free Report) and ProShares UltraShort 7-10 Year Treasury (PST - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Inverse Treasury ETFs Soar as Yields See Big Monthly Gain
Treasury yields logged the biggest monthly gain in February since September and October on prospects of tighter monetary policy for longer than expected. The 10-year yields topped 4%, marking the highest level since November, while 2-year yields reached its highest level since November to about 4.8%. The 6-month yield rose to above 5%, just shy of its highest level since Mar 12, 2007 (read: Rising Rate ETF Outperforms in February: Here's Why).
This has led to a spike in ETFs that bet against U.S. Treasury bonds.
Inverse ETFs provide opposite exposure that is a multiple (-1X, -2X or -3X) of the performance of the underlying index using various investment strategies, such as swaps, futures contracts and other derivative instruments. These ETFs could be worth buying for huge gains in a short span arising from rising yields.
The rise in yields came on the back of a series of solid economic data, which has rekindled concerns that interest rates could keep climbing for longer than anticipated. This is especially true as U.S. consumer spending increased the most in nearly two years in January and retail sales also increased the most in nearly two years in January after two straight monthly declines.
Hiring surged with the economy adding a solid 517,000 jobs in January. The unemployment rate fell from 3.5% to 3.4%, the lowest since 1969. Business activity unexpectedly rebounded in February, reaching its highest level in eight months.
The housing market is showing signs of improvement. U.S. builder confidence has risen for the second consecutive month to the highest level since September 2022. Signed contracts to buy existing homes in the United States rose the most since June 2020 in January.
Meanwhile, the Fed’s preferred inflation gauge accelerated in January at its fastest pace since June, while the consumer price index jumped 0.5% in January following a 0.1% increase in December. Both gauges have shown rising inflation and will thus prompt the central bank to raise interest rates to an even higher peak level and hold them there through the year (read: PCE Inflation Jumps the Most Since June: 5 ETFs to Play).
According to the CME FedWatch tool, markets are pricing in a 76.7% probability that the Fed will raise interest rates by 25 bps to a range of 4.75% to 5% on Mar 22.
ProShares UltraPro Short 20+ Year Treasury ETF
ProShares UltraPro Short 20+ Year Treasury ETF also offers three times the inverse performance of the same index. It has AUM of $371.5 million and an average daily volume of roughly 97,000 shares. The expense ratio comes in at 0.95%.
Direxion Daily 20+ Year Treasury Bear 3x Shares
Direxion Daily 20+ Year Treasury Bear 3x Shares offers three times the inverse exposure to the same ICE U.S. Treasury 20+ Year Bond Index. With AUM of $514.2 million, Direxion Daily 20+ Year Treasury Bear 3x Shares charges 88 bps in fees and trades in a solid volume of 320,000 shares a day on average.
Direxion Daily 7-10 Year Treasury Bear 3X Shares
Direxion Daily 7-10 Year Treasury Bear 3X Shares provides three times the inverse performance of the ICE U.S. Treasury 7-10 Year Bond Index. It charges 95 bps in annual fees and trades in an average daily volume of roughly 74,000 shares. Direxion Daily 7-10 Year Treasury Bear 3X Shares has accumulated $30 million in its asset base.
ProShares UltraShort 20+ Year Treasury ETF
ProShares UltraShort 20+ Year Treasury ETF seeks two times the inverse daily performance of the ICE U.S. Treasury 20+ Year Bond Index. It is the most popular and liquid ETF in the inverse Treasury space, with AUM of $744.2 million and an average daily volume of 3.1 million shares. ProShares UltraShort 20+ Year Treasury ETF charges 89 bps in annual fees.
ProShares UltraShort 7-10 Year Treasury
ProShares UltraShort 7-10 Year Treasury seeks to offer two times the inverse the daily performance of the ICE U.S. Treasury 7-10 Year Bond Index, charging 95 bps in annual fees. With AUM of $47.4 million, the fund trades in a volume of 67,000 shares a day on average.
Bottom Line
As a caveat, investors should note that such products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing — when combined with leverage — may force these products to deviate significantly from the expected long-term performance figures (see: all the Inverse Bond ETFs here).
Still, for ETF investors who believe that yields will continue to rise, any of the above products could make an interesting choice. Clearly, a near-term short could be intriguing for those with high-risk tolerance and a belief that the trend is the friend in this corner of the investing world.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.