Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
The Federal Reserve’s (Fed) January 27–28 meeting is shaping up as an early macro stress test for markets. And based on the tumultuous headlines so far in 2026, there could be many more challenges to follow this year.
Markets broadly expect no change in rates from the Fed, but traders are focused less on the decision itself and more on how policymakers frame the path forward—especially with Fed leadership uncertainty, stubborn inflation questions, and uneven growth signals still in play.
Recent Fed minutes highlighted internal divisions over how soon rates should come down, while political pressure on Fed Chair Jerome Powell has intensified ahead of an expected leadership transition. At the same time, early-year data on jobs, inflation, and growth will begin filling in the macro picture—just as geopolitical shocks from Venezuela and elsewhere ripple through energy markets. The latest employment report showed the U.S. economy added 50,000 jobs in December, slightly below expectations, as the unemployment rate fell to 4.4%, according to Yahoo Finance.
Against that backdrop, traders are watching three pressure points: long-duration Treasuries, intermediate Treasuries, and energy stocks. Each may react differently depending on how the Fed communicates, how the data lands, and whether inflation risks resurface.
Long-Duration Treasuries
Why Bulls Are Watching
Dovish tone risk: Softer language from the Fed on future cuts could benefit long bonds.
Leadership uncertainty: Powell’s eventual exit adds policy ambiguity.
Growth scare hedge: Long duration tends to react most to slowdown fears.
As reported by Reuters, the Fed’s final 2025 meeting exposed growing disagreement among policymakers over inflation risks and the timing of eventual easing. With Powell’s term nearing its end and political scrutiny rising, long-dated Treasuries remain sensitive to any hint the Fed may lean cautious rather than restrictive.
Traders leaning bullish on long-duration Treasuries might consider Direxion Daily 20+ Year Treasury Bull 3X Shares (Ticker: TMF), which seeks daily investment results, before fees and expenses, of 300% of the performance of the ICE U.S. Treasury 20+ Year Bond Index.
Why Bears Are Cautious
Higher-for-longer risk: Sticky inflation could cap bond upside.
Heavy supply: Treasury issuance remains elevated.
Data-dependent Fed: Strong data could delay cuts.
If inflation or growth data surprise to the upside, long bonds could remain under pressure as markets push out expectations for easing.
Traders anticipating downside in long bonds might look to Direxion Daily 20+ Year Treasury Bear 3X Shares (Ticker: TMV), which seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the performance of the ICE U.S. Treasury 20+ Year Bond Index.
Intermediate Treasuries
Potential Bullish Catalysts
Policy patience: The Fed may keep rates steady without signaling urgency.
Lower volatility: Mid-curve bonds often absorb uncertainty better.
Curve positioning: Intermediate maturities can benefit if the curve steepens.
According to Morningstar, markets see the January Fed meeting as a messaging event, and intermediate Treasuries may respond more moderately if the Fed stays noncommittal about cuts.
Traders leaning bullish on intermediate Treasuries might consider Direxion Daily 7-10 Year Treasury Bull 3X Shares (Ticker: TYD), which seeks daily investment results, before fees and expenses, of 300% of the performance of the ICE U.S. Treasury 7-10 Year Bond Index.
What Bears Are Watching
Repricing risk: Any hawkish surprise could pressure the belly of the curve.
Labor strength: Resilient employment could keep yields elevated.
Inflation data: Hotter-than-expected inflation data could weigh on bonds broadly.
Intermediate Treasuries may not escape volatility if incoming data forces markets to rethink rate expectations.
Traders positioning for downside might look to Direxion Daily 7-10 Year Treasury Bear 3X Shares (Ticker: TYO), which seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the performance of the ICE U.S. Treasury 7-10 Year Bond Index.
Energy Stocks
Why Bulls Are Watching
Geopolitical shocks: Oil prices remain headline sensitive.
Inflation hedge: Energy equities can benefit if price pressures re-emerge.
Equity momentum: Energy has shown strong reaction to macro events.
As reported by CBS News, oil prices and U.S. energy stocks jumped after the U.S. captured Venezuelan President Nicolás Maduro, highlighting how geopolitical developments can quickly ripple through energy markets, even when global supply impacts appear modest.
Traders leaning bullish on oil and gas exploration and production stocks might consider Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (Ticker: GUSH), which seeks daily investment results, before fees and expenses, of 200% of the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.
Potential Bearish Catalysts
Production overhang: Long-term supply additions could weigh on prices.
Growth slowdown: Softer demand could cap oil upside.
Volatility risk: Energy equities remain headline driven.
Despite short-term price spikes, analysts continue to debate how sustainable higher prices are given costs and global demand uncertainty.
Traders anticipating downside energy-related equities might look to Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares (Ticker: DRIP), which seeks daily investment results, before fees and expenses, of 200% of the inverse (or opposite) of the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.
*Definitions and Index Descriptions
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
The ICE U.S. Treasury 20+ Year Bond Index (IDCOT20TR) is a market value weighted index that includes publicly issued U.S. Treasury securities that have a remaining maturity of greater than 20 years. Eligible securities must be fixed rate, denominated in U.S. dollars, and have $300 million or more of outstanding face value, excluding amounts held by the Federal Reserve. Securities excluded from the Index are inflation-linked securities, Treasury bills, cash management bills, any government agency debt issued with or without a government guarantee and zero-coupon issues that have been stripped from coupon-paying bonds.
The ICE U.S. Treasury 7-10 Year Bond Index (IDCOT7TR) is a market value weighted index that includes publicly issued U.S. Treasury securities that have a remaining maturity of greater than seven years and less than or equal to ten years. Eligible securities must be fixed rate, denominated in U.S. dollars, and have $300 million or more of outstanding face value, excluding amounts held by the Federal Reserve. Securities excluded from the Index are inflation-linked securities, Treasury bills, cash management bills, any government agency debt issued with or without a government guarantee and zero-coupon issues that have been stripped from coupon-paying bonds.
The S&P Oil & Gas Exploration & Production Select Industry Index (SPSIOPTR) is provided by S&P Dow Jones Indices, LLC and includes domestic companies from the oil and gas exploration and production sub-industry. The Index is a modified equal-weighted index that is designed to measure the performance of a sub-industry or group of sub-industries determined based on the Global Industry Classification Standards (GICS).
One cannot directly invest in an index.
Neither Rafferty nor the Direxion Daily 20+ Year Treasury Bull 3X Shares and the Direxion Daily 20+ Year Treasury Bear 3X Shares (the “Financial Products”) is sponsored, endorsed, sold or promoted by Interactive Data Pricing and Reference Data, LLC or its affiliates (“Vendor”). Vendor makes no representation or warranty regarding the advisability of investing in securities generally, in the Financial Products particularly, or the ability of the ICE U.S. Treasury 20+ Year Bond Index to track general financial market performance. VENDOR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE ICE INDEX OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL VENDOR HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. A Fund is non-diversified and includes risks associated with the Fund’s concentrating its investments in a particular industry, sector, or geography which can increase volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause prices to fluctuate over time.
Leverage Risk – Each Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation or inverse correlation with the Index and may increase the volatility of the Fund.Daily Index Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with the Index and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day.
Daily Inverse Index Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with the Index and therefore achieve its daily inverse leveraged investment objective. The Bear Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day.
U.S. Government Securities Risk – A security backed by the U.S. Treasury or the full faith and credit of the United States is guaranteed only as to the timely payment of interest and principal when held to maturity. The market prices for such securities are not guaranteed and will fluctuate.
Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Market Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Other Investment Companies (including ETFs Risk), Cash Transaction Risk, Passive Investment and Index Performance Risk and for the Direxion Daily 20+ Year Treasury Bear 3X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.
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