The recent blowout jobs report, revealing the addition of 256,000 jobs in December and a drop in the unemployment rate to 4.1%, has intensified expectations of continued economic growth and potential interest rate hikes by the Federal Reserve. This has led to a more cautious approach among bond buyers, who are now anticipating higher yields. The report's strength, although not entirely unexpected, has reinforced the bearish sentiment in the bond market, with investors predicting that yields on 10-year and 30-year bonds could surpass 5% for the first time since October 2023.
The Direxion Daily 20+ Year Treasury Bull 3X Shares ETF (TMF), which aims to provide triple the daily performance of the ICE U.S. Treasury 20+ Year Bond Index, is experiencing the impact of these market dynamics. As bond yields rise, the attractiveness of holding existing bonds diminishes, contributing to the ETF's current challenges. Investors are increasingly considering equities over bonds, given the potential for stronger economic growth, which typically benefits stock markets.
As of 09:32 on January 10, TMF is trading at $36.95, down from its last close of $38.09. The ETF opened at $37.32, with an intraday low of $36.90, reflecting the ongoing bearish momentum in the bond market amid rising yield expectations.