Investors are strategically positioning themselves ahead of the $13 billion 20-year Treasury bond reopening sale, scheduled for 1 PM NYT. The anticipation of this auction has led to a rise in bond yields, as market participants sell existing Treasuries to create demand for the new issuance. This pre-auction activity increases the supply of bonds in the market, exerting upward pressure on yields. The move is part of a broader strategy where investors aim to repurchase bonds at potentially lower prices during the auction, capitalizing on yield adjustments.
The rise in bond yields has implications beyond the bond market, potentially affecting interest-rate sensitive assets. As yields increase, they may draw investors away from equities and towards fixed-income securities, reflecting the inverse relationship between bond prices and yields. This dynamic is crucial for investors in ETFs like the Direxion Daily 20+ Year Treasury Bull 3X Shares (TMF), which seeks to provide 300% of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index.
As of 11:41 on January 22, TMF is trading at $39.84, down from its last close of $40.45. The ETF opened at $40.34, with an intraday high of $40.47 and a low of $39.80, as investors react to the shifting bond market landscape.