Investor focus is increasingly turning to the implications of 30-year Treasury bond yields approaching the 5% mark, a level traditionally seen as a sell signal for equities. However, the more critical factor may be the interplay between real yields and inflation. Rising real yields have bolstered the U.S. dollar by offering superior returns after inflation adjustments, making it more attractive compared to other currencies. This dynamic supports U.S. equities and assets, provided inflation remains in check and does not erode purchasing power.
The TMF ETF, which seeks to deliver three times the daily performance of the ICE U.S. Treasury 20+ Year Bond Index, is closely watched in this environment. The ETF's performance is sensitive to changes in long-term Treasury yields and inflation expectations. As of 17:40 on January 8, TMF is trading at $37.73, slightly down from its last close of $37.98, and near its 52-week low of $37.165.