On the fixed income front, we also witnessed activity that caught our attention. With iShares Barclays 20+ Year Treasury (NYSEArca: TLT) hugging its 50 day moving average as equities rallied toward the end of last week, about $300 million left the fund while Direxion Daily 20 Year Plus Treasury Bear 3X (NYSEArca: TMV) saw monstrous activity on the buyside. [ETF Chart of the Day: Inverse Treasury Funds]
TMV is designed to deliver 3 times the daily inverse return of the NYSE 20 Year Plus Treasury Index and more than 3 million shares of the ETF traded last Thursday versus average daily trading volume of about 300,000 shares per day.
This was the largest single day trading volume in this product by a mile, since the ETF’s inception, and it seems that a large institution or institutions are aggressively positioning for a short term reversal in Long Term Treasury prices (and rising yields), which would likely correspond with a continued rally in equities.
ProShares UltraShort Barclays 20+ Year Treasury (NYSEArca: TBT) is also worth watching in the near term in this context as it also saw inflows late last week.
Finally, also in the fixed income arena, iShares iBoxx Investment Grade Corporate Bond ETF (NYSEArca: LQD) saw impressive inflows (over $500 million on the week) but fell for five straight trading sessions after trading at a multi-year high the previous Friday. It is possible that some of the outflows in Long Term U.S. Treasuries are finding a home in LQD which tracks the Investment Grade Corporate Bond market. LQD may generally appeal to those that are seeking higher yields than Treasuries and are willing to take additional risk to earn them.
SPDR Dow Jones Industrial Average
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