Bullish Leveraged Treasury ETF Ticks Higher on Inflation Bets

Traders continue to see inflation as a key driver for the capital markets these days, and bets on inflation being non-transitory have translated into an uptick for the Direxion Daily 20+ Year Treasury Bull 3X Shares (TMF).

Treasury yields weakened along with the U.S. dollar after a September U.S. Consumer Price Index report showed that inflation is continuing to heat up. Meanwhile, TMF notched a 2% gain the last five days as yields headed downward.

Rumblings of stagflation, an economic environment in which inflation is high and economic growth is stagnant, are starting to circulate within the capital markets. As such, investors are heading into safe haven assets like gold while Treasury yields tick lower across the board.

“As signs that inflation is likely not transient have emerged over the last few days between commodity price rallies…increasing wage inflation and price inflation, gold’s role as an inflation hedge has moved back to the forefront,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.TMF Chart

Triple the Exposure on Bullish Bond Prices

To capture the downward movements in yields, ETF traders can use TMF to play higher bond prices since both move inversely with one another. TMF, in particular, plays yields on the longer end of the curve with its focus on benchmark Treasury notes that exceed 20 years in duration.

For traders looking to maximize their gains, TMF provides leveraged exposure. TMF seeks daily investment results, before fees and expenses, of 300% of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index.

The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments and securities of the index, ETFs that track the index, and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index. The index is a market value-weighted index that includes publicly issued U.S. Treasury securities that have a remaining maturity of greater than 20 years.

TMF and other leveraged products from Direxion Investments give investors the ability to:

  • Magnify short-term perspective with daily 3X leverage.
  • Go where there’s opportunity, with bull and bear funds for both sides of the trade.
  • Stay agile with liquidity to trade through rapidly changing markets.

For more news, information, and strategy, visit the Leveraged & Inverse Channel.