$TLT Fell 48% From Its ATH, Long $TMV & Short TMF as Further Interest Rate Hikes
Bond tracking ETF, $iShares 20+ Year Treasury Bond ETF(TLT)$ , falls below $90 for the first time since April 2011.
The $39 billion iShares 20+ Year U.S. Treasury ETF $iShares 20+ Year Treasury Bond ETF(TLT)$ has fallen 48% from its all-time high in 2020 and is currently at its lowest since 2011. Meanwhile, data from IHS Markit showed short trading in the fund increased, with short positions as a percentage of its float reaching the highest in about a month.
Same sad story happened to $Direxion Daily 20+ Year Treasury Bull 3X Shares(TMF)$
In this regard, Todd Sohn, ETF and technology strategist at research firm Strategas Securities, said: It's all about interest rate expectations - inflation is causing (interest rates) to move significantly higher, which combined with a stronger-than-expected economy means rates continue to move higher.
There is also the possibility of further interest rate hikes, which would be damaging to any long-duration asset.
The 10-year note yield $10-YR T-NOTE - main 2312(ZNmain)$ is now trading above 4.50% for the first time since 2007.
The 2-year note yield $2-YR T-NOTE - main 2312(ZTmain)$ is now up a massive 500 basis points since September 2021.
Treasury yields are hitting 15+ year highs daily now as Fed pause expectations go well the second half of 2024. 8% mortgages are coming quickly.
Looking ahead, BTIG chief market technical analyst Jonathan Krinsky wrote in a memo last week: The bond trend is firmly downward, to the extent that we continue to expect long-term rates to turn lower as 'longer-term higher rates' impact the economy. At that time, we expected lower interest rates to be accompanied by lower stocks, and we haven't seen much of that all year.
With the expectation that interest rates may continue to rise, should we continue to short $iShares 20+ Year Treasury Bond ETF(TLT)$ , $Direxion Daily 20+ Year Treasury Bull 3X Shares(TMF)$ at this moment, and then go long $Direxion Daily 20 Year Plus Treasury Bear 3x Shares(TMV)$ ?
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