The market's response to recent tariff announcements is reflected in a bear flattener trade, indicating concerns over short-term inflation and long-term growth prospects. Investors are increasingly net long on longer-dated Treasuries, viewing them as a hedge against inflationary pressures expected from tariffs. This shift is accompanied by a rise in net shorts in SOFR futures, suggesting anticipation of higher short-term interest rates as the Federal Reserve may tighten monetary policy to combat inflation.
In addition to Treasuries, gold and the dollar have seen significant interest, with net longs reaching decade highs. This trend underscores their roles as safe havens amid economic uncertainty driven by tariffs. Meanwhile, the decline in net long positions in US stocks highlights investor caution about the potential negative impact of tariffs on corporate earnings and economic growth.
The Direxion Daily 20+ Year Treasury Bear 3X Shares ETF (TMV), which aims to deliver triple the inverse performance of the ICE U.S. Treasury 20+ Year Bond Index, is currently trading at $39.40 as of 09:53 on February 4, reflecting the market's strategic positioning in response to tariff-related economic concerns.