The Direxion Daily 20-Yr Treasury Bull 3x ETF (TMF) is experiencing pressure as the bond market grapples with rising yields. The recent surge in U.S. Treasury yields, particularly the 10-year yield nearing 5%, has been a focal point for investors. This movement is largely attributed to a stronger-than-expected December employment report, which showed a significant increase in payrolls, suggesting a reacceleration in economic growth. The robust job data has led to a steepening of the yield curve, known as a bear steepener, where long-term rates rise faster than short-term rates. This has raised concerns about the Federal Reserve's future interest rate policies, with traders now reducing their expectations for rate cuts in 2025.
Additionally, global market conditions are contributing to the volatility in the bond market. The U.S. dollar has reached two-year highs, and the rise in Treasury yields is impacting borrowing costs worldwide, affecting both Asian and European markets. The geopolitical landscape, including new U.S. sanctions on Russia, has also led to a spike in oil prices, further complicating the inflation outlook. These factors are creating a challenging environment for long-term Treasuries, as investors weigh the implications of higher yields and potential inflationary pressures.
The TMF ETF remained flat at $37.30 as of 10:00 AM ET on January 13, 2025.