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Short Treasury ETF (TBX) Hits a New 52-Week High

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Investors seeking momentum may have ProShares Short 7-10 Year Treasury (TBX - Free Report) on radar now. The fund recently hit a new 52-week high. Shares of TBX are up approximately 6.1% from their 52-week low of $27.55/share.

But could there be more gains ahead for this ETF? Let’s take a look at the fund and the near-term outlook to get a better idea of where it might be headed.

TBX in Focus

TBX focuses on providing inverse exposure to  with seven-10-year maturity. It seeks to provide -1x returns, before fees and expenses, of the ICE U.S. Treasury 7-10 Year Bond Index. TBX is not suitable for investors building a long-term portfolio. Instead, it is more useful for those looking for a short-term position against Treasuries. TBX charges 95 basis points in fee per year and has AUM of $35.6 million (see all Inverse Bond ETFs here).

Why the move?

The yield on benchmark 10 year note rose to the highest level since April 2014, as investors bet on growing inflation. Moreover, a declining greenback also led to a surge in treasury yields. On Feb 2, 2018, 10-year yield surged to 2.85%. Moreover, the Fed is widely expected to hike interest rates multiple times this year, as Jerome Powell takes over the lead from Janet Yellen. Although economists expect 3 interest rate hikes this year, strong wage growth and economic data may force the Fed to adopt an aggressive rate hike stance.  

More Gains Ahead?

TBX has a weighted alpha of 3.18. Although it doesn’t seem that appealing, the U.S. economic scenario might prompt inverse bond ETFs to gain further. So, there is a promising outlook ahead for those who want to ride this surging ETF a shade further.

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