Bearish Treasury Bond ETFs are still rising

2015-05-12 10:15:46

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Since April 17, the triple-inversed ETFs based on 20+ Year Treasury Bond Indices (TTT and TMV) have already grown 28% above S&P, considering beta value.

In the same time, the less leveraged, double-inversed ProShares' TBT has gained 20% in absolute value and 18,5% above S&P. These ETFs are driven by the rising interest rates of Treasury Bonds. The uptrend has also been seen on the long-term government bonds of European countries (including Germany, France, United Kingdom) as well as Japan, Australia or Canada.

The latest trend can be surprising because of the quite poor economic data in recent times, and more and more comments that Fed will raise the interest rates neither in June, nor even in September. However, commodity prices are rising, together with inflation expectations. The U.S. Dollar has decreased, although these expectations should be followed by rising probability of interest rates rise and thus by rising strength of U.S. Dollar.

Nevertheless, higher inflation has been expected. Maybe the market is expecting the cost-push inflation (e.g. driven by the commodity prices increase), which can make Fed refrain from the interest rates rise.

http://www.trendsinvesting.com/motif-details/s%2aTTT/months/relative

http://www.trendsinvesting.com/motif-details/s%2aTMV/months/relative

http://www.trendsinvesting.com/motif-details/Inverse,Long-term/months/absolute

 

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