With news of a possible second round of government stimulus flooding the capital markets, if the central bank maintains its stance on keeping rates low, the whole yield curve could fall under the 1% mark.
“Everybody thinks the Fed is going to be running rates near zero indefinitely. That’s bringing down the 30-year bond yield to incredibly low rates,” said Brian Bethune, chief economist for Alpha Economic Foresights LLC.
As far as the latest moves in government debt, a Reuters report noted that the “30-year U.S. Treasury US30YT=RR, at around 1.25%, was still more than 25 basis points away as of Monday, rebounding from Friday when it touched its lowest since April. Tradeweb noted last week that the decline in the 30-year yield meant that the entire yield curve was moving close to being sub 1%.”
“I think the downward pressure on yields will continue for the foreseeable future,” Nick Maroutsos, co-head of global bonds for Janus Henderson, who also noted that “it’s only a matter of time before the entire U.S. curve trades below 1%.”
As these events unfold, here are four ETFs short-term traders can use for Treasurys:
- Direxion Daily 20+ Year Treasury Bull 3X Shares (NYSEArca: 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 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.
- Direxion Daily 20+ Year Treasury Bear 3X ETF (NYSEArca: TMV): seeks daily investment results before fees and expenses of 300% of the inverse (or opposite) of the daily performance of the ICE U.S. Treasury 20+ Year Bond 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.
- Direxion Daily 7-10 Year Treasury Bull 3X Shares (NYSEArca: TYD): seeks daily investment results, before fees and expenses, of 300% of the daily performance of the ICE U.S. Treasury 7-10 Year Bond 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 seven years and less than or equal to ten years.
- Direxion Daily 7-10 Year Treasury Bear 3X Shares (NYSEArca: TYO): seeks daily investment results before fees and expenses of 300% of the inverse (or opposite) of the daily performance of the ICE U.S. Treasury 7-10 Year Bond 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 seven years and less than or equal to ten years.
For more market trends, visit ETF Trends.
