TBF ETF

The U.S. Treasury yields are on the rise with the start of second-quarter 2024, as the hopes for interest rates cut in June cooled down following the hotter-than-expected manufacturing data.

The long-dated Treasuries posted their biggest two-day loss in months leading to a surge in ETFs that bet against U.S. Treasury bonds.

TBF may be useful as CPI data comes out next week which we expect to stoke fears of the stickiness of inflation. Leveraged ETFs have daily resetting returns and should be used over short durations due to value erosion and volatility drift. Moreover, TBF is sensitive to rate changes due to high duration. We are more confident in the longer-term realisation of markets than the shorter term in inflation's stickiness.

The U.S. Treasury yields have been on a surge lately, driven by the expectations of the Federal Reserve maintaining elevated interest rates. This has led to a surge in ETFs that bet against U.S. Treasury bonds.

The double whammy of a Fitch Rating credit rating cut and chances of a hawkish Fed has pushed the 10-Year U.S. Treasury yield to the highest level since November 2022, according to Dow Jones Market Data, quoted on Barrons.