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Guessing what the Federal Reserve is going to do next is an increasingly difficult task. For some time, the war in Iran bolstered the possibility that the central bank would have to raise rates at some point this year to damp inflation.
The Nikkei 225 Index jumped and neared its all-time high as memory and semiconductor companies like Kioxia, Tokyo Electron, Advantest, and Keyence Corporation soared. It jumped by over 5% to 71,950, a few points below the all-time high of 72,781.
May's inflation data could bring Treasury bulls back into the fray. If the Fed has the signal they need to start easing monetary policy, then it could bring up the Direxion Daily 20+ Year Treasury Bull 3X Shares (TMF) and the Direxion Daily 7-10 Year Treasury Bull 3X Shares (TYD).
Tariffs are roiling the major stock market indexes with volatility. So investors have been pouring into bonds to escape the turmoil.
Inflation appears to be stubborn and persistent. That's providing entry points for three Direxion inverse ETFs for traders looking to capitalize on rising yields.
The spike in yields has led to a surge in ETFs that bet against U.S. Treasury bonds.
With the path to rate cuts clearer, Treasury bonds have been heading higher since the start of the summer, but they've taken a turn. The return of rising yields have been putting the Direxion Daily 20+ Yr Trsy Bear 3X ETF (TMV) and the Direxion Daily 7-10 Year Treasury Bear 3X Shares (TYO) back into positive territory.
The expectation of interest rate cuts can keep pushing bond ETFs higher, giving traders options in bullish leveraged options for profit maximization. In the meantime, more investors are adding bonds to their portfolios, especially after a volatile August.