Tariffs are roiling the major stock market indexes with volatility. So investors have been pouring into bonds to escape the turmoil. Short-term traders may want to keep an eye on opportunities for Treasuries to gain or even fall. Leveraged/inverse funds from Direxion can help.
For the past few years, fixed income investors have been reaping the benefits of high yields. But as they begin to fall, price appreciation is superseding yield. In unsteady markets, when yields fall and Treasuries subsequently rise, traders can use the Direxion Daily 20+ Year Treasury Bull 3X Shares (TMF) and the Direxion Daily 7-10 Year Treasury Bull 3X Shares (TYD). TMF seeks daily investment results of 300% of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. TYD seeks 300% of the daily performance of the ICE U.S. Treasury 7-10 Year Bond Index.
″The big flight to cash continues as investors seek a shelter for their money amid the tariff storm,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said in a CNBC report.
“Banks are seen as barometers for economic [health. And] given the steep losses, red lights are flashing about a looming global recession. These warnings are also showing up in the bond markets. Falling treasury yields are an indication that the chance of recession is increasingly being priced in,” she added.
Of course, markets are dynamic and can change course quickly. That was recently the case when news broke that President Trump would pause tariffs. As such, stock market indexes rose and bonds sold off. But in the case of inverse ETFs, this creates additional short-term profitability opportunities.
Benefit From the Tariff Pause
In cases were bonds sell off, traders can use the Direxion Daily 20+ Yr Trsy Bear 3X ETF (TMV) and the Direxion Daily 7-10 Year Treasury Bear 3X Shares (TYO). Both funds take the opposite approach of TMV and TYO, providing added flexibility in Treasuries for traders.
This allows traders to stay flexible in times of heavy volatility. And that creates opportunities irrespective of bonds going up or down. The potential pause on tariffs may have momentarily stopped the proverbial bleeding in the stock markets. But as mentioned, this can all change at a moment’s notice. Traders having the ability to ride an up or down trend can benefit the most.
“The 90-day suspension does allow nice breathing room to allow negotiation to settle in and market valuations have clearly been reset,” said Carol Schleif, chief market strategist at BMO private wealth. “Yet the uncertainty for companies remains.”
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