Japanese Yield Spike And The Leveraged TBT ETF
The ProShares UltraShort 20+ Year Treasury ETF (TBT) is rated a buy for short-term bearish exposure to long-term U.S. Treasury bonds, given accelerating declines in Japanese and U.S. government bonds. JGBs have fallen 6% since April 2025, driven by persistent inflation, wage growth, yen weakness, and BOJ tightening, with yields at multi-year highs. Rising Japanese yields are seen as a major global risk, with potential spillover to U.S. bond markets and amplified downside for TLT.
TBT: Combining This ETF With TLTW Can Keep Yield Above 10% While Lowering Risk
US Treasury Bonds present a compelling opportunity, with falling yields likely to drive significant price appreciation, potentially outpacing stock market gains. TBT, an inversed and 2x leveraged ETF, can create a powerful combination for yield investors, when deployed in combination with TLTW. This is not without risk, but I strongly believe it represents the type of investing (ETF pairs, offense-defense) that more investors should be considering.
TBT Provides -2x Leveraged Exposure To The 20-Year Treasury
TBT offers -2x daily performance of 20+ Year Treasury Bonds, but is highly risky and unsuitable for long-term holding due to value decay. Leveraged inverse ETFs like TBT can experience significant compounding effects and performance drift if held beyond a single day, amplifying potential losses. Macroeconomic factors and likely Fed rate cuts in September 2025 could drive long-term Treasury yields lower, making TBT vulnerable to further declines.
TBT For A Bond Market 'Crack'
The U.S. 30-year Treasury bond market remains in a bearish trend, with critical support at the October 2023 low and risks of a further breakdown. Jamie Dimon and bond market vigilantes warn of a potential 'crack' in the bond market, driven by high U.S. debt, policy uncertainty, and rising rates. Moody's recent downgrade and persistent fiscal concerns reinforce the bearish case, but surprises or shocks could trigger a bond market rally.
TBT: Too Late To Sell? Is TLT The Correct Choice?
ProShares UltraShort 20+ Year Treasury ETF, a 2x leveraged inverse 20-year treasury ETF, is currently a poor choice due to sideways market movement and declining long-term interest rates. TLT and IEF are better options now, offering lower expense ratios, higher volume, and dividends, making them suitable for the current economic climate. Market uncertainty and potential recession favor long-duration bond ETFs like TLT and IEF over inverse funds like TBT.
My Favorite Strategy To Trade Long-Term Treasury Bonds
The strategy uses signals to go long and short on bonds via TMF and TBT. By comparing the 30-day performance of SPY and DJP, the strategy determines positions in TBT or TMF based on inflation and asset price trends. The strategy shows positive alpha, negative beta to SPY, and outperforms TLT and SPY in average performance and Sharpe ratio, with lower drawdowns.
TBT: Inverse Bond Exposure Is The Key Hedge To My Trump Portfolio
Inverse bond exposure is attractive short to medium term due to inflationary pressures from Trump's economic policies, despite my generally bullish stance on equities. December inflation data shows a 2.9% CPI increase, above the Fed's 2% target, suggesting the potential for continued inflation and higher interest rates. Tariffs and tax cuts under Trump's administration are expected to drive inflation through increased consumer prices and disposable income, outweighing potential labor supply shocks.
TBT: A Bet Against Long Duration Rates
The ProShares UltraShort 20+ Year Treasury ETF offers leveraged inverse exposure to long-term U.S. Treasury bonds, aiming for -2x daily performance of the ICE U.S. Treasury 20+ Year Bond Index. The TBT ETF's strategy involves short positions in U.S. Treasury futures and swaps with various banks, providing inverse exposure while mitigating counterparty risk. TBT stands out among inverse Treasury ETFs due to its -2x leverage, balancing risk and caution, with better liquidity and narrower bid-ask spreads.
TBT: The Rate Cut May Not Lead To A Bond Market Rally
The Fed's shift to a more accommodative monetary policy may not guarantee a bond market rally due to high U.S. debt and declining foreign demand. The U.S. dollar's faltering reserve currency status and political division further erode confidence in U.S. government bonds, increasing borrowing costs. ProShares UltraShort 20+ Year Treasury ETF offers a leveraged bearish bet on bonds, benefiting from potential declines in long-term U.S. Treasury bonds.
