We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ETFs to Buy on Likely March Rate Hike And More Thereafter
Read MoreHide Full Article
The latest Fed meeting came across as hawkish. Federal Reserve policy makers indicated that they are likely to enact their first interest rate hike since 2018 in their March meeting to combat sky-high inflation.
“With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the central bank said in a statement that concluded its two-day meeting in late January.
Fed Chairman Jerome Powell said asset purchases are also likely to end in March. While officials have not made any plans about when the Fed will start rolling off the nearly $9 trillion in Treasuries and mortgage-backed securities it is holding, statements out of the meeting indicated that the process could begin soon.
Investors had already feared such a move and started to price in a more aggressive schedule this year than what FOMC officials had indicated. Goldman Sachs and J.P. Morgan expect five Fed rate hikes this year while Bank of America says sees seven Fed rate hikes this year.
With the possibility of a hawkish Fed in 2022, government bond yields started rising. Hence, ETFs those fare better in a rising rate environment, should be tapped now. These ETFs cover value ETFs like SPDR Portfolio S&P 500 Value ETF (SPYV - Free Report) , financial ETFs like SPDR S&P Bank ETF (KBE - Free Report) , interest-hedged ETFs like ProShares High Yield Interest Rate HedgedETF (HYHG - Free Report) and convertible bond ETFs like SPDR Bloomberg Barclays Convertible Securities ETF (CWB - Free Report) .
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
ETFs to Buy on Likely March Rate Hike And More Thereafter
The latest Fed meeting came across as hawkish. Federal Reserve policy makers indicated that they are likely to enact their first interest rate hike since 2018 in their March meeting to combat sky-high inflation.
“With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the central bank said in a statement that concluded its two-day meeting in late January.
Fed Chairman Jerome Powell said asset purchases are also likely to end in March. While officials have not made any plans about when the Fed will start rolling off the nearly $9 trillion in Treasuries and mortgage-backed securities it is holding, statements out of the meeting indicated that the process could begin soon.
Investors had already feared such a move and started to price in a more aggressive schedule this year than what FOMC officials had indicated. Goldman Sachs and J.P. Morgan expect five Fed rate hikes this year while Bank of America says sees seven Fed rate hikes this year.
With the possibility of a hawkish Fed in 2022, government bond yields started rising. Hence, ETFs those fare better in a rising rate environment, should be tapped now. These ETFs cover value ETFs like SPDR Portfolio S&P 500 Value ETF (SPYV - Free Report) , financial ETFs like SPDR S&P Bank ETF (KBE - Free Report) , interest-hedged ETFs like ProShares High Yield Interest Rate Hedged ETF (HYHG - Free Report) and convertible bond ETFs like SPDR Bloomberg Barclays Convertible Securities ETF (CWB - Free Report) .