The anticipation of rising inflationary pressures, as indicated by the upcoming Producer Price Index (PPI) report, is creating a bearish outlook for bonds. Economists forecast December's core PPI to have accelerated to 0.3% m/m and 3.8% y/y, up from 0.2% and 3.4% respectively in November. This increase suggests potential monetary policy tightening, as bond investors may use the PPI as a proxy for the Consumer Price Index (CPI) due the following day. Various reports, including those from the Philadelphia Fed and S&P Global, highlight rising input costs across manufacturing and services sectors, reinforcing expectations of broader inflationary trends.
The Direxion Daily 20+ Year Treasury Bear 3X Shares ETF (TMV), which aims to deliver triple the inverse performance of the ICE U.S. Treasury 20+ Year Bond Index, is positioned to benefit from these inflationary signals. As bond prices are pressured by anticipated interest rate hikes, TMV provides investors with a tool to capitalize on declining bond values.
As of 08:22 on January 14, TMV is trading at $42.91, slightly above its last close of $42.76, and nearing its 52-week high of $43.26. This movement reflects the market's response to the expected inflationary data and its potential impact on bond prices.