Rising Treasury yields are exerting pressure on the Direxion Daily 20-Yr Treasury Bull 3x ETF (TMF) as concerns about persistent inflation and economic data continue to influence the bond market. On January 8, 2025, the benchmark 10-year Treasury yield surged to 4.67%, marking its highest level in over eight months. This increase is driven by fears of sticky inflation, particularly after recent economic data indicated a robust U.S. services sector and steady job openings, which have reduced the likelihood of further interest rate cuts by the Federal Reserve. The bond market's reaction to these developments has been swift, with long-term rates rising despite the Fed's recent rate cuts, signaling expectations of higher future rates.
Additionally, a bond selloff in the UK and Europe has contributed to the upward pressure on U.S. Treasury yields. The global bond market is reacting to a combination of factors, including inflationary concerns and geopolitical uncertainties, which are prompting investors to demand higher yields for holding long-term debt. This environment has led to a challenging landscape for Treasury-focused ETFs, as rising yields typically result in declining bond prices, impacting funds like TMF that are leveraged to long-term U.S. government debt.
The TMF ETF is currently trading at $37.51, reflecting a 1.24% decline from its previous close.