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The Zacks Analyst Blog Highlights: CWB, CORP, FLOT, IWM and KBE
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For Immediate Release
Chicago, IL – June 18, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: SPDR Bloomberg Barclays Convertible Securities ETF (CWB - Free Report) , PIMCO Investment Grade Corporate Bond Index ETF (CORP - Free Report) , iShares Floating Rate Bond ETF (FLOT - Free Report) , iShares Russell 2000 ETF (IWM - Free Report) and SPDR S&P Bank ETF (KBE - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Fed Rate Hike in the Cards? ETFs to Buy
As widely expected, the Fed held interest rates steady at a near-zero level in its latest meeting. U.S. interest rates have been this low since March 2020. However, the forecast revealed that 13 members of the Federal Open Market Committee believe the Fed will hike rates in 2023 and the majority expect at least two hikes that year, per a CNBC article. Seven of the 18 members see the Fed increasing rates as early as 2022.
The Fed also hiked its inflation forecast for the year. The central bank now expects inflation to jump to 3.4% this year, higher than its previous forecast of 2.4%. PCE inflation expectation has gone up to 2.1% for 2022 from 2% projected in March and to 2.2% for 2022 (from 2.1%).
The Fed upgraded its forecast for 2021 GDP growth from 6.5% in March to 7.0% and beefed up the 2023 growth forecast from 2.2% to 2.4%. The Fed projected the longer-run growth measure at 1.8%.
Market Reaction
The immediate impact was felt in the bond market. The yield on 10-year U.S. Treasury rose on Jun 16, 2021 to 1.57% from the prior day at 1.51%. The 10-year Treasury yield, notably started 2021 under 1%.
Against this backdrop, investors can bet on the following ETFs for current income and likely capital appreciation.
Convertible bonds are those that can be exchanged if the holder chooses to, for a specific number of preferred or common shares if the company's share price climbs past a said conversion price during the bond's tenure. The fund yields 2.76% annually and charges 20 bps in fees.
Corporate Bonds – PIMCO Investment Grade Corporate Bond Index ETF
If you really want a fixed-income exposure, investment-grade corporate bonds are great now. The underlying ICE BofAML US Corporate Index is an unmanaged index comprising U.S. dollar denominated investment-grade, fixed-rate corporate debt securities publicly issued in the U.S. domestic market with at least one-year remaining term to final maturity and at least $250 million outstanding. These bonds are highly rated. The fund yields 2.76% annually and charges 20 bps in fees.
iShares Floating Rate Bond ETF
Floating rate notes are investment grade bonds that do not pay a fixed rate to investors but have variable coupon rates that are often tied to an underlying index (such as LIBOR) plus a variable spread depending on the credit risk of issuers. Since the coupons of these bonds are adjusted periodically, they are less sensitive to an increase in rates compared to traditional bonds (see all Investment Grade Corporate Bond ETFs here).
Small-Caps – iShares Russell 2000 ETF
Investors should note that small-cap stocks are likely to do better in a growing economy since these are tied more to domestic activities. So, with the GDP growth forecast being upgraded, investors have every reason to play the small-cap ETF IWM.
Financials – SPDR S&P Bank ETF
If the yield curve steepens ahead, banking stocks may gain. Moreover, an improving economy is always great for banking stocks as these give cues of corporations’ and households’ better financial health. This, in turn, results in lower delinquency rate.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: CWB, CORP, FLOT, IWM and KBE
For Immediate Release
Chicago, IL – June 18, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: SPDR Bloomberg Barclays Convertible Securities ETF (CWB - Free Report) , PIMCO Investment Grade Corporate Bond Index ETF (CORP - Free Report) , iShares Floating Rate Bond ETF (FLOT - Free Report) , iShares Russell 2000 ETF (IWM - Free Report) and SPDR S&P Bank ETF (KBE - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Fed Rate Hike in the Cards? ETFs to Buy
As widely expected, the Fed held interest rates steady at a near-zero level in its latest meeting. U.S. interest rates have been this low since March 2020. However, the forecast revealed that 13 members of the Federal Open Market Committee believe the Fed will hike rates in 2023 and the majority expect at least two hikes that year, per a CNBC article. Seven of the 18 members see the Fed increasing rates as early as 2022.
The Fed also hiked its inflation forecast for the year. The central bank now expects inflation to jump to 3.4% this year, higher than its previous forecast of 2.4%. PCE inflation expectation has gone up to 2.1% for 2022 from 2% projected in March and to 2.2% for 2022 (from 2.1%).
The Fed upgraded its forecast for 2021 GDP growth from 6.5% in March to 7.0% and beefed up the 2023 growth forecast from 2.2% to 2.4%. The Fed projected the longer-run growth measure at 1.8%.
Market Reaction
The immediate impact was felt in the bond market. The yield on 10-year U.S. Treasury rose on Jun 16, 2021 to 1.57% from the prior day at 1.51%. The 10-year Treasury yield, notably started 2021 under 1%.
Against this backdrop, investors can bet on the following ETFs for current income and likely capital appreciation.
Convertible Bonds – SPDR Bloomberg Barclays Convertible Securities ETF
Convertible bonds are those that can be exchanged if the holder chooses to, for a specific number of preferred or common shares if the company's share price climbs past a said conversion price during the bond's tenure. The fund yields 2.76% annually and charges 20 bps in fees.
Corporate Bonds – PIMCO Investment Grade Corporate Bond Index ETF
If you really want a fixed-income exposure, investment-grade corporate bonds are great now. The underlying ICE BofAML US Corporate Index is an unmanaged index comprising U.S. dollar denominated investment-grade, fixed-rate corporate debt securities publicly issued in the U.S. domestic market with at least one-year remaining term to final maturity and at least $250 million outstanding. These bonds are highly rated. The fund yields 2.76% annually and charges 20 bps in fees.
iShares Floating Rate Bond ETF
Floating rate notes are investment grade bonds that do not pay a fixed rate to investors but have variable coupon rates that are often tied to an underlying index (such as LIBOR) plus a variable spread depending on the credit risk of issuers. Since the coupons of these bonds are adjusted periodically, they are less sensitive to an increase in rates compared to traditional bonds (see all Investment Grade Corporate Bond ETFs here).
Small-Caps – iShares Russell 2000 ETF
Investors should note that small-cap stocks are likely to do better in a growing economy since these are tied more to domestic activities. So, with the GDP growth forecast being upgraded, investors have every reason to play the small-cap ETF IWM.
Financials – SPDR S&P Bank ETF
If the yield curve steepens ahead, banking stocks may gain. Moreover, an improving economy is always great for banking stocks as these give cues of corporations’ and households’ better financial health. This, in turn, results in lower delinquency rate.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.