The latest Personal Consumption Expenditures (PCE) report, showing a rise in the Fed's preferred inflation measure to 2.6% from 2.4%, has reinforced concerns about persistent inflationary pressures. This follows earlier reports of rising Consumer Price Index (CPI) and Producer Price Index (PPI) figures, with the latter indicating potential future consumer price hikes. Torsten Slok, Chief Economist at Apollo Global, emphasized that the narrative of a slowing economy and declining inflation is misguided, suggesting that the market's expectation of a Fed rate cut in June may be overly optimistic. The prospect of new tariffs and potential shocks to housing affordability could further exacerbate inflation, putting additional pressure on bond markets.
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 closely watched by investors seeking leveraged exposure to long-term Treasury bonds. As inflation remains above the Fed's 2% target, the likelihood of a rate cut diminishes, potentially leading to higher long-term bond yields and impacting TMF's performance.
As of 09:31 on January 31, TMF is trading at $40.95, slightly above its last close of $40.85. The ETF opened at $40.95, with an intraday high of $40.97 and a low of $40.89, reflecting the market's cautious stance amid ongoing inflation concerns.