Treasury bond yields continue to move higher. The 3o year rates now stands at 4.75% at the high for June 2009 and August 2008. The creep higher is in anticipation of the Fed raising the overnight Fed funds rate later this year. The move last night in the discount rate was the first in a long series of actions to be taken by the Fed to unwind the stimulus to keep banks liquid and healing from the crisis. Taking it back will be a delicate process, but rates will move higher in time.

As you can see on the chart below, TBT, ProShares UltraShort 20+ year Treasury bond ETF has moved higher on the rise in yields. The impact of higher yields is negative to bond prices and thus the fund is short Treasury bonds. The leverage of the accelerates the upside, but also carries equal risk. TBF is the same short Treasury fund without the leverage.

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There have been several trading opportunities with the move in interest rates with this ETF. The latest is the bounce off the trendline at $46.80 and the clearing of the resistance at $48.60. The next level of resistance is $51.09. If the negative sentiment gains traction from the Feds action on the discount rate we could accelerate towards the previous high of $54.50. Use caution investing in this ETF due to the leverage.

As with any investment the key is a strategy to your entry point, stop to protect against the downside and target to know what your objective is in owning the fund. This all points to risk management of your money whether investing short or long term.