Direxion Daily 20+ Year Treasury Bull 3x Shares (TMF), a leveraged ETF tracking long-term Treasury bonds, plunged 5.62% in pre-market trading on Wednesday. This sharp decline comes as Treasury yields spiked dramatically overnight, with the 10-year Treasury yield reaching as high as 4.516% before settling at 4.35%, up 4.5 basis points.

The Treasury market faced significant pressure as investors bailed out of what has traditionally been considered one of the world's safest instruments. The sell-off was primarily driven by expectations of crumbling foreign demand as new tariffs take effect. Jim Bianco, president and macro strategist at Bianco Research, described the situation as a "disorderly liquidation" in the bond market.

Looking ahead, the market faces two major tests of foreign demand with upcoming Treasury auctions: $39 billion of 10-year notes on Wednesday and $22 billion of 30-year bonds on Thursday. The impact of tariffs on the bond market is expected to be significant, potentially leading to inflationary pressures and reduced recycling of dollars into U.S. Treasury securities by foreign countries. As TMF is designed to provide triple the daily performance of the ICE U.S. Treasury 20+ Year Bond Index, any continued volatility or further increases in Treasury yields could lead to additional downward pressure on the ETF.