On the surface, rising yields and technology may not appear like they correlate, but when one goes up, the other could subsequently fall. This gives traders options when it comes to inverse plays.
“Bond yields are back on the rise. That could deliver another blow to technology stocks, which have already taken a beating,” a Barron’s article notes.
“The yield on 10-year Treasury debt closed Monday at 2.139%—the highest 3 p.m. level since June 11, 2019—up from 1.72% on March 1,” the article adds. “Prices of the bonds have fallen as a rush into haven assets such as U.S. Treasury debt has faded in response to hope for diplomatic progress between Russia and Ukraine.”
2 ETFs to Consider With Leverage
For profit potential, there are a pair of leveraged exchange traded funds (ETFs) to consider from Direxion investments. Should tech weakness result from inflation, traders can take a look at the Direxion Daily Technology Bear 3X ETF (TECS ).
TECS seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the daily performance of the Technology Select Sector Index. The index is provided by S&P Dow Jones Indices and includes domestic companies from the technology sector.
On the other hand, with yields pushing higher and bond prices lower, traders can also get bearish on bond prices. As such, one fund to consider is the Direxion Daily 20+ Yr Treasury Bear 3X ETF (TMV ).
TMV seeks daily investment results equal to 300% of the inverse of the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. TMV invests in swap agreements, futures contracts, short positions, or other financial instruments that provide inverse or short leveraged exposure to the index, which is a market value-weighted index that includes publicly issued U.S. Treasury debt securities that have a remaining maturity of greater than 20 years.
For more news, information, and strategy, visit the Leveraged & Inverse Channel.