There are two ways to play this scenario by going short on long-term Treasuries: with the ProShares UltraShort 20+ Year Treasury (NYSEArca: TBT) or the Direxion Daily 30-Year Treasury Bear 3x Shares (NYSEArca: TMV). Both have just recently crossed above their 200-day moving average on Tuesday.
Investors seem to have been feeling generally bearish on Treasuries over the last couple of months as fears that the Fed will raise rates grow. In August, for example, TBT was the fifth most popular U.S. ETF, raking in $585 million in new cash. Year-to-date through November, the fund has amassed $2.14 billion in new money while TMV has taken in $214 million in the same time frame to increase its assets nearly 175% from a year ago. [Coping with a Bond Bubble In Retirement.]
Of course, like all leveraged and inverse ETFs, TBT and TMV aren’t for everyone. Returns can diverge from the underlying index as a result of compounding, so be prepared to monitor such ETFs closely when you own them.
Visit our Treasury bond ETF category for more articles about Treasuries.
For full disclosure, Tom Lydon’s clients own TBT.