The probability of the Fed hiking rates this year rose to 78%, the highest in two months, according to futures contract activity as the economy showed signs of improvement. For instance, the U.S. added more jobs in February than analysts predicted and the slump in factory activity showed signs of easing.
Other money managers also anticipate the Fed to hold back on rate hikes this year. Morgan Stanley recently forecasted only one rate hike in December out of the Fed this year, predicting yields on 10-year Treasuries will dip to 1.45% by the end of September.
Nevertheless, bond yields push highers and weigh on bond prices, especially on long-duration assets, investors can turn to bearish long-term bond ETFs to hedge further Treasury debt weakness. For example, the ProShares Short 20+ Year Treasury (NYSEArca: TBF) takes the simple inverse or -100% daily performance of the Barclays U.S. 20+ Year Treasury Bond Index. The ProShares UltraShort 20+ Year Treasury (NYSEArca: TBT) tries to reflect the -2x or -200% daily performance of the Barclays U.S. 20+ Year Treasury Bond Index. Additionally, the Direxion Daily 20-Year Treasury Bear 3X (NYSEArca: TMV) tracks the -3x or -300% daily performance of the NYSE 20 Year Plus Treasury Bond Index.
iShares 7-10 Year Treasury Bond ETF