I’m adding shares of the ProShares Short 20+ Year Treasury ETF (TBF) to my Jubak Picks Portfolio and to the Volatility Portfolios on my subscription JubakAM.Com site tomorrow, May 28, as a play in the continued decline in prices at the long end of the Treasury market.
In the last month the yield on the 30-year Treasury has climbed to 5.04% on Friday, May 24, from 4.58% at the beginning of 2025. Since the price of the bond goes down as the yield goes up, investors who hold the 30-year Treasury are looking at a loss of about 9% in the value of their holdings.
The reasons for the drop in the price of the bonds aren’t exactly secret. Moody’s Investors Service just downgraded the U.S. credit rating as the level of government debt continues to rise and neither Congress nor the administration seem about to actually do anything to even slow the pace of increases. The spending bill just passed by the House of Representatives just added to the problem. And some international investors have decided they want less exposure to the U.S. dollar.
The ProShares Short 20+ Year Treasury ETF, which seeks to make money when the ICE Index of Treasuries with 20 years or more until maturity falls, is up 3.91% in 2025, but ahead 5.31% in the last month and 8.95% in the last 3 months.
I don’t think that run is done. The Senate is likely to make the House spending bill even worse–either by increasing the deficit produced by the bill or by cutting counter-cyclical safety net spending enough to produce a painful recession. The Trump tariff policy volatility will continue to erode confidence in the dollar.
The ETF carries a relatively steep 0.95% expense ratio, but that’s not out of line for active hedging vehicles.
I think this ETF offers safety in a nutty bond market, a useful hedge on the bond portion of your portfolio, and the possibility of a profit from continued troubles at the long end of the yield curve.
