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Fed Chair Janet Yellen has concluded her four-year tenure. In her final meeting, Yellen indicated that the Fed is still trying to stimulate economic growth. As expected, the Fed kept the rates unchanged but the meeting was closely watched since it was Yellen’s farewell assembly.
Against this backdrop, let’s take look at Yellen’s final quotes and what impact these could have on the ETF world.
Fed Appears Less Worried About Inflation
Yellen believes the slack in inflation this year is “transitory” and that it was wise for the Fed to pursue gradual rate increases. In a nutshell, the Fed appears less worried about the lack of inflation and seems steadfast on raising interest rates three or more times this year. The Fed also included that it expects to see inflation rise this year and stabilize around its 2% target.
TIPS ETFs in Focus
Against such comments, ProShares Inflation Expectations ETF (RINF - Free Report) ,PIMCO 15+ Year US TIPS Index Fund (LTPZ - Free Report) and SPDR Citi International Government Inflation-Protected Bond ETF (WIP - Free Report) may be up for gains.
Yellen: Recovery 'Increasingly Broad Based' in United States and Worldwide
The U.S. economy has gathered steam this year and will warrant continued interest rate increases amid stronger global recovery. There is an idea that the tax reform would boost the companies’ profits which could be used for further investments and increased productivity and higher wages.
Though the impact of this tailwind is “very hard to detect in economic data. It is not strong enough or pronounced enough to come across in a clear way.” “We are suffering from slow productivity growth. In making fiscal policy and other decisions the focus should be on how that can be improved.” Yellen has been upbeat on global economic growth.
Growth ETFs in Focus
Naturally, growth ETFs should be in focus ahead. PowerShares QQQ (QQQ - Free Report) , iShares Russell 1000 Growth ETF (IWF - Free Report) ,Vanguard Growth ETF (VUG - Free Report) and iShares S&P 500 Growth ETF (IVW - Free Report) are the funds that should be watched carefully to make some profits.
Yellen Sees High Asset Values
Quality ETFs to Tap
Yellen also said that while asset values were “high by historical standards, overall vulnerabilities in the financial sector appear moderate.” As the broader market hit incessant highs, the market is definitely overvalued. The Fed is likely to take a more hawkish stance ahead. In any case, bond yields are rising.
So, stocks may fall in the coming days to some extent. So, investors need to look at quality ETFs as well. iShares MSCI USA Quality Factor ETF (QUAL - Free Report) , PowerShares S&P 500 High Quality Portfolio (SPHQ - Free Report) and FlexShares Quality Dividend Index Fund (QDF - Free Report) should thus be in focus (read: 5 High Quality ETFs for an Uncertain Market).
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What Yellen's Final Meeting Means for These ETFs
Fed Chair Janet Yellen has concluded her four-year tenure. In her final meeting, Yellen indicated that the Fed is still trying to stimulate economic growth. As expected, the Fed kept the rates unchanged but the meeting was closely watched since it was Yellen’s farewell assembly.
Against this backdrop, let’s take look at Yellen’s final quotes and what impact these could have on the ETF world.
Fed Appears Less Worried About Inflation
Yellen believes the slack in inflation this year is “transitory” and that it was wise for the Fed to pursue gradual rate increases. In a nutshell, the Fed appears less worried about the lack of inflation and seems steadfast on raising interest rates three or more times this year. The Fed also included that it expects to see inflation rise this year and stabilize around its 2% target.
TIPS ETFs in Focus
Against such comments, ProShares Inflation Expectations ETF (RINF - Free Report) ,PIMCO 15+ Year US TIPS Index Fund (LTPZ - Free Report) and SPDR Citi International Government Inflation-Protected Bond ETF (WIP - Free Report) may be up for gains.
Yellen: Recovery 'Increasingly Broad Based' in United States and Worldwide
The U.S. economy has gathered steam this year and will warrant continued interest rate increases amid stronger global recovery. There is an idea that the tax reform would boost the companies’ profits which could be used for further investments and increased productivity and higher wages.
Though the impact of this tailwind is “very hard to detect in economic data. It is not strong enough or pronounced enough to come across in a clear way.” “We are suffering from slow productivity growth. In making fiscal policy and other decisions the focus should be on how that can be improved.” Yellen has been upbeat on global economic growth.
Growth ETFs in Focus
Naturally, growth ETFs should be in focus ahead. PowerShares QQQ (QQQ - Free Report) , iShares Russell 1000 Growth ETF (IWF - Free Report) ,Vanguard Growth ETF (VUG - Free Report) and iShares S&P 500 Growth ETF (IVW - Free Report) are the funds that should be watched carefully to make some profits.
Yellen Sees High Asset Values
Quality ETFs to Tap
Yellen also said that while asset values were “high by historical standards, overall vulnerabilities in the financial sector appear moderate.” As the broader market hit incessant highs, the market is definitely overvalued. The Fed is likely to take a more hawkish stance ahead. In any case, bond yields are rising.
So, stocks may fall in the coming days to some extent. So, investors need to look at quality ETFs as well. iShares MSCI USA Quality Factor ETF (QUAL - Free Report) , PowerShares S&P 500 High Quality Portfolio (SPHQ - Free Report) and FlexShares Quality Dividend Index Fund (QDF - Free Report) should thus be in focus (read: 5 High Quality ETFs for an Uncertain Market).
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 >>