ProShares UltraShort 20+ Year Treasury (TBT): A unique setup

While I always keep an eye on interest rates, I almost never trade based on them. But today, I think there’s a unique setup in ProShares UltraShort 20+ Year Treasury (TBT). Granted, I’m not an economist (thank goodness), but fundamentally, it’s a fact that leading economic indicators are at their highest levels since 2010 and there is undoubtedly pro-business talk from the new U.S. administration (especially tax and regulatory cuts).

Thus, after years of low and even negative interest rates, the fundamentals suggest higher interest rates and the chart mostly agrees—long-term Treasury bond yields are holding firm at multi-month highs after their post-election surge.

TBT allows investors to take advantage of higher rates by effectively shorting long-term Treasuries on a leveraged basis. You could buy some now, though I’d be more interested if TBT shows signs of resuming its uptrend—buying around 41 with a stop near 38 makes sense.

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