The upcoming week is set to be pivotal for the bond market, with key economic indicators such as tariffs, ISM surveys, and the US jobs report poised to influence long-term interest rates. Analysts anticipate that these data points will reflect a robust economy, potentially delaying the first expected Federal Reserve rate cut to September due to rising inflation concerns. The imposition of tariffs on consumer goods, food products, cars, and medical equipment could exacerbate price pressures, while a stronger-than-expected ISM Manufacturing report and jobs data may further bolster economic growth expectations. Torsten Slok of Apollo Global suggests that the ISM could rise to 54, aligning with a first-quarter GDP growth of 3.4%, surpassing the consensus forecast.
These developments are likely to impact the demand for long-term bonds, such as the 30-year Treasury, as investors adjust their expectations for future rate cuts. Higher inflation expectations and robust economic data could push long-term yields closer to 5%, reflecting increased inflationary pressures. This scenario may lead to a sell-off in bond markets, as prices fall and yields rise, affecting ETFs like the Direxion Daily 20+ Year Treasury Bull 3X Shares (TMF), which seeks to amplify the performance of long-term Treasury bonds.
As of 15:11 on January 31, TMF is trading at $39.86, down from its last close of $40.85. The ETF opened at $40.90, with an intraday high of $41.26 and a low of $39.78, amid market adjustments to anticipated economic data and potential tariff impacts.