The bond market is experiencing a bear steepening trend as investors refocus on supply and positioning, with longer-term yields rising faster than shorter-term ones. This shift is driven by a resurgence in corporate bond issuance, as delayed tariffs on Mexico and Canada, along with a symbolic countermove from China, have reduced market volatility. The improved conditions have led to a dozen new deals in the pipeline, surpassing initial estimates of eight, which is expected to put upward pressure on yields as investors demand higher returns to absorb the increased supply.
The JPMorgan Treasury all-client survey highlights the largest outright short positions since October, with the fewest net longs since December, indicating a bearish sentiment in the bond market. This sentiment is further supported by dealer expectations that Commodity Trading Advisors will incrementally add to short positions. These factors, combined with hedging and rate-locking flows associated with the new deals, are likely to weigh on bond prices, contributing to the upward pressure on yields.
The Direxion Daily 20+ Year Treasury Bull 3X Shares ETF (TMF), which aims to provide triple the daily performance of the ICE U.S. Treasury 20+ Year Bond Index, is currently trading at $40.18 as of 09:54 on February 4, down from its last close of $40.95. The ETF opened at $40.09, with an intraday high of $40.23 and a low of $40.01, reflecting the broader market dynamics affecting long-term Treasury yields.