Direxion announced the expansion of its fixed income product line on Thursday with the launch of two leveraged ETFs targeting a short-term Treasury index. The Direxion Daily 2-Year Treasury Bull 3x Shares (TWOL) seeks 300% of the daily performance of the NYSE Arca Current 2-Year U.S. Treasury Index, a benchmark that consists of the most recently issued 2-year U.S. Treasury notes. The Daily 2-Year Treasury Bear 3x Shares (TWOZ) seeks 300% of the inverse of the daily performance of the same index.

The addition of TWOL and TWOZ expands Direxion’s leveraged fixed income offerings to six funds, joining 300% and -300% ETFs linked to the the NYSE Arca Current 10-Year U.S. Treasury Index (TYD and TYO) and NYSE Arca Current 30-Year U.S. Treasury Index (TMF and TMV). While most leveraged ETFs are linked to equity benchmarks, leveraged bond funds have seen a surge in popularity over the last year. According to the latest industry figures from the National Stock Exchange, leveraged bond ETF assets exceed $5 billion, with the vast majority of that amount in inverse funds. The ProShares UltraShort 20+ Year Treasury (TBT) took in more than $2 billion alone last year.

"That will never happen to this country." (Timothy Geitner in response to suggestions that the U.S. Treasury may one day lose its Aaa credit rating.)

ProShares made an addition to its line of leveraged fixed income products on Thursday, launching the Ultra 7-10 Year Treasury (UST) and Ultra 20+ Year Treasury (UBT). UST seeks daily investment results that correspond to 200% of the daily performance of the Barclays Capital 7-10 Year U.S. Treasury Index, while UBT will seek to deliver daily amplified returns on the Barclays Capital 20+ Year U.S. Treasury Index.

ProShares has offered the UltraShort 7-10 Year Treasury (PST) and UltraShort 20+ Year Treasury (TBT) since April 2008. TBT in particular has seen its popularity surge as investors bet against long-dated Treasuries: the fund saw cash inflows of $2.2 billion in 2009 and is now the largest leveraged ETF by total assets.