We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Capitalize on Yield Surge With Inverse Treasury ETF
Read MoreHide Full Article
The U.S. Treasury yields are on the rise with the start of second-quarter 2024, as the hopes for interest rates cut in June cooled down following the hotter-than-expected manufacturing data. The 10-year yield climbed to 4.40%, the highest since late November 2023, whereas 2-year yields touched a fresh two-week high of 4.73%.
Amid rising yields, investors should put their money in ETFs that bet against the U.S. Treasury bonds. For them, we have highlighted some inverse or leveraged inverse ETFs that could be worth buying for huge gains in a short span. These include ProShares Short 20+ Year Treasury ETF (TBF - Free Report) , ProShares UltraShort 20+ Year Treasury ETF (TBT - Free Report) ), Direxion Daily 20+ Year Treasury Bear 3x Shares (TMV - Free Report) , ProShares UltraPro Short 20+ Year Treasury ETF (TTT - Free Report) and Direxion Daily 7-10 Year Treasury Bear 3X Shares (TYO - Free Report) .
Inverse ETFs provide opposite exposure, which 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.
Investors have started feeling less confident about the pace of rate cuts for this year, given the resilient economic activities. Manufacturing activities unexpectedly expanded in March 2024 for the first time since September 2022, according to data by the Institute for Supply Management, on a sharp rebound in production and stronger demand. In February, new orders for the United States-manufactured goods grew more than expected, boosted by demand for machinery and commercial aircraft. Meanwhile, job openings, a measure of labor demand, held steady at higher levels in February.
ProShares Short 20+ Year Treasury ETF (TBF - Free Report)
ProShares Short 20+ Year Treasury ETF provides inverse exposure to the ICE U.S. Treasury 20+ Year Bond Index. It has accumulated $89.9 million in its asset base and charges 92 bps in annual fees. Volume is solid at 345,000 shares a day on average.
ProShares UltraShort 20+ Year Treasury ETF (TBT - Free Report)
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 an AUM of $314.9 million and an average daily volume of 932,000 shares. ProShares UltraShort 20+ Year Treasury ETF charges 90 bps in annual fees.
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 an AUM of $220.9 million, Direxion Daily 20+ Year Treasury Bear 3x Shares charges 88 bps in fees and trades in a solid volume of 2.4 million shares a day on average.
ProShares UltraPro Short 20+ Year Treasury ETF (TTT - Free Report)
ProShares UltraPro Short 20+ Year Treasury ETF also offers three times the inverse performance of the same index. It has an AUM of $42.2 million and an average daily volume of roughly 16,000 shares. Its expense ratio is at 0.95%.
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 23,000 shares. Direxion Daily 7-10 Year Treasury Bear 3X Shares has accumulated $13.9 million in its asset base.
Bottom Line
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, at least in the near term, 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 trend is the friend in this corner of the investing world.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Capitalize on Yield Surge With Inverse Treasury ETF
The U.S. Treasury yields are on the rise with the start of second-quarter 2024, as the hopes for interest rates cut in June cooled down following the hotter-than-expected manufacturing data. The 10-year yield climbed to 4.40%, the highest since late November 2023, whereas 2-year yields touched a fresh two-week high of 4.73%.
Amid rising yields, investors should put their money in ETFs that bet against the U.S. Treasury bonds. For them, we have highlighted some inverse or leveraged inverse ETFs that could be worth buying for huge gains in a short span. These include ProShares Short 20+ Year Treasury ETF (TBF - Free Report) , ProShares UltraShort 20+ Year Treasury ETF (TBT - Free Report) ), Direxion Daily 20+ Year Treasury Bear 3x Shares (TMV - Free Report) , ProShares UltraPro Short 20+ Year Treasury ETF (TTT - Free Report) and Direxion Daily 7-10 Year Treasury Bear 3X Shares (TYO - Free Report) .
Inverse ETFs provide opposite exposure, which 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.
Investors have started feeling less confident about the pace of rate cuts for this year, given the resilient economic activities. Manufacturing activities unexpectedly expanded in March 2024 for the first time since September 2022, according to data by the Institute for Supply Management, on a sharp rebound in production and stronger demand. In February, new orders for the United States-manufactured goods grew more than expected, boosted by demand for machinery and commercial aircraft. Meanwhile, job openings, a measure of labor demand, held steady at higher levels in February.
Per the latest CME's FedWatch tool, the US rate futures market is now pricing in a 63.59% chance of a rate cut in June, down from about 70% a week ago (read: No Rate Cut Until Summer? High-Yield Short-Term Bond ETFs to Buy).
ETFs to Play
ProShares Short 20+ Year Treasury ETF (TBF - Free Report)
ProShares Short 20+ Year Treasury ETF provides inverse exposure to the ICE U.S. Treasury 20+ Year Bond Index. It has accumulated $89.9 million in its asset base and charges 92 bps in annual fees. Volume is solid at 345,000 shares a day on average.
ProShares UltraShort 20+ Year Treasury ETF (TBT - Free Report)
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 an AUM of $314.9 million and an average daily volume of 932,000 shares. ProShares UltraShort 20+ Year Treasury ETF charges 90 bps in annual fees.
Direxion Daily 20+ Year Treasury Bear 3x Shares (TMV - Free Report)
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 an AUM of $220.9 million, Direxion Daily 20+ Year Treasury Bear 3x Shares charges 88 bps in fees and trades in a solid volume of 2.4 million shares a day on average.
ProShares UltraPro Short 20+ Year Treasury ETF (TTT - Free Report)
ProShares UltraPro Short 20+ Year Treasury ETF also offers three times the inverse performance of the same index. It has an AUM of $42.2 million and an average daily volume of roughly 16,000 shares. Its expense ratio is at 0.95%.
Direxion Daily 7-10 Year Treasury Bear 3X Shares (TYO - Free Report)
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 23,000 shares. Direxion Daily 7-10 Year Treasury Bear 3X Shares has accumulated $13.9 million in its asset base.
Bottom Line
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, at least in the near term, 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 trend is the friend in this corner of the investing world.