The TMF ETF, which aims to deliver three times the daily performance of the ICE U.S. Treasury 20+ Year Bond Index, is poised to benefit from recent labor market data trends. Softer-than-expected US payrolls data could trigger increased buying in longer-dated US Treasuries, as investors anticipate a potential short-squeeze due to excessive short positioning. This scenario aligns with expectations for more than one Federal Reserve rate cut this year, as noted by market analysts. The divergence in labor reports, with the household survey showing a decline in employment and the U6 unemployment rate rising, further supports the case for a weaker labor market.
The potential for a short-squeeze in longer-dated Treasuries, driven by softer labor market data, could lead to higher prices and lower yields, particularly if yields remain under 5%. This environment enhances the appeal of the TMF ETF, which seeks to capitalize on such movements in the Treasury market. As of 07:31 on January 10, TMF is trading at $37.78, slightly below its last close of $38.09, and near its 52-week low of $37.16.