3 Leveraged ETFs For The Fed's Move To Near Zero

3 Leveraged ETFs For The Fed's Move To Near Zero

In an effort to rescue the U.S. economy from the effects of the COVID-19 pandemic, the Federal Reserve expended its heavy artillery on Sunday, slashing interest rates to near-zero while revealing a massive $700 billion bond-buying operation.

“The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent,” said the Federal Open Market Committee (FOMC) in a statement. “The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

As was the case when the Fed announced an emergency 50-basis point rate cut earlier this month, market reaction, judging by Sunday night futures and early Monday trading in Asia. In other words, today and the rest of this week could be an exciting time for some or of the following leveraged exchange-traded funds.

Direxion Daily 20+ Year Treasury Bull 3X Shares (TMF)

Long-dated Treasuries usually aren't thought of as exciting, but that reputation has been put to bed in recent weeks due to tumbling yields and increased market volatility. Well, when yields fall (as they did again Sunday evening), price rises and that's a boon for the Direxion Daily 20+ Year Treasury Bull 3X Shares TMF.

TMF attempts to deliver triple the daily returns of the ICE U.S. Treasury 20+ Year Bond Index. That index excludes “zero-coupon STRIPS, inflation-linked securities, floating-rate notes, cash management and Treasury bills, and any government agency debt issued with or without a government guarantee,” according to Direxion.

Last week, TMF tumbled nearly 22% as traders yanked $52.63 million from the fund, but following Sunday's Fed news, this ETF could be poised to bounce back.

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