Inverse exchange traded funds designed to short U.S. Treasuries have been getting more attention lately as yields rise and bond prices pull back.
These bearish ETFs, some of which use leverage, include ProShares UltraShort 20+ Year Treasury (NYSEArca: TBT), ProShares UltraShort 7-10 Year Treasury (NYSEArca: PST), ProShares Short 20+ Year Treasury (NYSEArca: TBF) and Direxion Daily 30-Year Treasury Bear 3X (TMV).
Yields on the 10-year note have jumped from around 2% to about 2.4% this month. Bond prices and yields move in opposite directions. [Rising Yields Punish Treasury ETFs]
Interest rates are still extremely low with many investors seeking safety in U.S. Treasuries, and also on the Federal Reserve’s bond-buying programs. An improving economy and inflation concerns could be driving the recent move higher in yields.
The decline in Treasury prices follows a quiet period of “volatility contraction” in the bond market, according to Waverly Advisors.