Stock exchange traded funds bounced on Thursday along with European markets amid talk of a ban on short sales of stocks as officials appear willing to take new steps to ease the credit crisis.
SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) jumped almost 4% as the Dow was on track for a nearly 400-point gain following its recent pullback.
European stock indexes closed Thursday’s volatile session higher following reports a market regulator is considering endorsing a temporary ban on short sales of stocks. [Short-Sale Ban?]
In bonds, Treasury ETFs plummeted while yields surged following an auction of 30-year notes that saw very weak demand.
The iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) was down about 4% in afternoon trading. A leveraged ETF that bets against Treasuries, Direxion Daily 20+ Year Treasury Bear 3X Shares (NYSEArca: TMV), rallied more than 10%. [ETF Chart of the Day: Shorting Treasuries]
Treasury ETFs have been benefitting from the recent flight to safety as yields decline along with stocks. Bond yields and prices move in opposite directions.
For example, iShares Barclays 20+ Year Treasury Bond was up 18.8% year to date as of Aug. 10, according to Morningstar, despite the Standard & Poor’s U.S. credit downgrade.
In precious metals, gold ETFs fell after the Chicago Mercantile Exchange raised margin requirements to trade Comex gold futures contracts. [Gold ETFs Weaken After Margin Hike]
Tom Lydon appeared on CNBC to discuss precious metals ETFs on Thursday. [Tom Lydon Talks Gold on CNBC]
iShares Barclays 20+ Year Treasury Bond
