Short Bond ETF Review

With long term interest rates coming off historic lows and the fed pursuing an initiative to bring inflation rates back up to "normal", many people feel that a perfect storm is coming for the bond market. Anyone who has experienced these in the past knows how violent the bond market can retreat when inflation or even "inflation expectations" enter the picture.

If you are wanting to use a Short Bond ETF to capitalize on a collapse in bond prices you have 3 solid choices, it just depends on how much leverage you want to use.

TBF - Inverse Bond ETF (No Leverage)seeks to provide -100% of the daily performance of TLT

TBT - Double Short Bond ETF (2x Inverse) seeks to deliver -200% of the daily performance of TLT

TMV - Triple Short Bond ETF (3x Inverse) seeks to deliver -300% of the daily performance of the NYSE 30 Yr Treasury Index.


If you are not experienced with Short ETF products make sure you do your research before diving in. These ETFs are designed to track the "Daily" performance of the underlying security, so they reset each night after the close. This characteristic makes it a short term trading vehicle but not suitable for long term positions.

If you are expecting a sharp move lower in bonds, one of these could be a good way to play it. Just do your research first!

Big Day For "Beat Up" Leveraged Inverse ETFs

The big winners today were the Leveraged Inverse ETFs all of which have been pounded to death over the last 18 months. The 3 biggest winners were:

DTO (+10.07%) - ProShares Double Short Crude Oil ETN
EDZ (+9.67%) - Direxion 3x Leveraged Short Emerging Markets ETF
ZSL (+9.67%) - ProShares Ultra Short Silver ETF


All of these pops are strong "Counter Trend" reactions to the Chinese raising their key interest rate today which sparked a rally in the U.S. Dollar as well. Crude Oil, Emerging Markets and Silver have all been very strong performers the past 6 weeks in anticipation of the Federal Reserves QE2 Program.

Expect more volatility in the days ahead!

Double Silver ETF Interest Surges

I noticed yesterday lots of people were searching Google looking for a Double Silver ETF as we were getting higher than normal traffic from that keyword phrase. Hopefully they will just do their research and wait for a better entry point as silver has run over 30% in the last 6 weeks. I don't believe silver is done yet, but I've taken profits and will wait for a setback before buying anything!

That said, we have been waiting for a setback the past couple weeks to add to positions and never got it. It appears the major commercial banks that held about 1/3 of all the short positions in Comex Silver have been trying to get out. Could get pretty wild.

AGQ is the ticker symbol for the Double Silver ETF