The falling inflation outlook and recent spat of market volatility has helped support a rally in the Treasuries market and bond-related exchange traded funds.
Over the past month, the iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) rose 6.2%, PIMCO 25+ Year Zero Coupon US Treasury (NYSEArca: ZROZ) increased 10.6% and Vanguard Extended Duration Treasury ETF (NYSEArca: EDV) gained 9.3%. The long-term Treasury bond ETFs are coming up against their 200-day exponential moving average resistance.
For the more aggressive traders, the ProShares Ultra 20+ Year Treasury (NYSEArca: UBT), which takes the 2x or 200% daily performance of long-term Treasuries, was up 12.0% and Direxion Daily 20+ Year Treasury Bull 3x Shares ETF (NYSEArca: TMF), which follows the 3x or 300% performance of long-term Treasuries, advanced 18.6% over the past month.
The number of bearish U.S. government debt investors have declined as crude oil prices fell, reports Alexandra Scaggs for Bloomberg.
In July, commodities have plunged 10%, contributing to the bond market’s inflation forecasts – lower inflation translates to improved real yield for long-term Treasuries.
Consequently, JPMorgan Chase & Co. revealed that the number of clients betting on a fall in government-debt has declined over the past week. Nevertheless, the bears still outnumbered the bulls by 5 percentage points, the last since late February.
“Treasuries had stronger prices almost exclusively because oil started falling again,” Jim Vogel, interest-rate strategist with FTN Financial, told Bloomberg. “It began to indicate that something else was going on, beyond the fallout from global risk” in China and Greece.