The imposition of new tariffs by President Trump has introduced significant uncertainty into the financial markets, particularly affecting the dynamics between short and long-term interest rates. The tariffs, targeting Mexico and Canada, are expected to increase inflation risk, leading to higher short-term rates. This scenario poses challenges for steepeners, which typically benefit from a widening spread between short and long-term rates. As inflation expectations push short-term rates higher, recession fears are simultaneously driving long-term rates lower, making long-dated Treasuries more attractive due to their safety and potential for capital gains.
The TMV ETF, which seeks to deliver triple the inverse performance of the ICE U.S. Treasury 20+ Year Bond Index, is directly impacted by these market dynamics. As recession risks mount, the demand for long-dated Treasuries increases, potentially affecting the performance of inverse bond ETFs like TMV. The market remains on edge, with investors closely monitoring any potential negotiations or tariff adjustments that could alter the current economic outlook.
As of 12:32 on February 3, TMV is trading at $38.51, down from its last close of $39.57. The ETF opened at $38.02, reaching an intraday high of $38.69 and a low of $37.35, reflecting the ongoing volatility and investor sentiment surrounding the tariff developments.