Recent robust economic data has intensified upward pressure on yields, as markets brace for tighter monetary policy to curb inflation. The unemployment rate fell to a notable 4.1%, bolstered by a significant 478,000 rise in household employment, which has led to expectations of a flattening yield curve. This scenario arises as short-term rates are anticipated to rise more sharply than long-term rates, with investors showing increased interest in longer-dated bonds as 30-year yields approach the 5% mark. The equity market, already sensitive to interest rate changes due to high valuations, is experiencing downward pressure as rising yields elevate borrowing costs and apply a higher discount rate to future cash flows.
The Direxion Daily 20+ Year Treasury Bull 3X Shares ETF (TMF), which aims to deliver triple the daily performance of the ICE U.S. Treasury 20+ Year Bond Index, is currently trading at $36.54 as of 08:51 on January 10. This reflects a decline from its last close of $38.09, amid the broader market's reaction to the strong economic indicators and the resulting yield curve dynamics.