The S&P 500 and the Dow Jones lost 0.3% and 0.1% last week, respectively while the Nasdaq Composite and the Russell 2000 added 0.6% and 1.4% last week. The last week was quite a news-packed week. Among the notable ones, higher-than-expected inflation and retail sales data were especially noteworthy, which in turn, boosted the bets over a more hawkish Fed.
The annual inflation rate in the United States decelerated slightly to 6.4% in January, from 6.5% in December. The inflation figure came in higher than the market forecast of 6.2%. Still, it marked the lowest reading since October 2021 (read:
4 Sector ETFs to Win from January Inflation Data).
Compared to the previous month, the CPI rose 0.5%, the most in three months and following a 0.1% increase in December. Economists surveyed by Dow Jones expected an increase of 0.4%, as quoted on CNBC (read:
Rising Rates ETFs to Tap on Upbeat Economic Data).
If this was not enough, retail sales in the United States increased 3% sequentially in January of 2023, the biggest increase since March 2021 and way above market forecasts of a 1.8% rise. The reading showed that American consumers continued to spend due to an upbeat labor market. January gains came after a 1.1% drop in December.
Treasury yields rose following higher-than-expected inflation and retail sales data as these triggered the speculation that the Fed may act pretty hawkish in the coming days. In any case, the jobs data, too, was upbeat, giving the Fed a leeway to act freely on the monetary policy tightening issue.
The benchmark 10-year U.S. treasury yield was 3.72% at the start of the last week. But the yield shot up to 3.86% on Feb 16, 2022 after the release of those two afore-mentioned economic data points. However, the yield finally dropped to 3.82% to close out the week.
Meanwhile, U.S. homebuilder confidence has risen for the second consecutive month to the highest level since September 2022. The National Association of Home Builders/Wells Fargo gauge of builder sentiment increased to 42 in February, the largest monthly gain in 10 years (read:
Homebuilder Confidence Rises Most in a Decade: ETFs to Tap).
Against this backdrop, below we highlight a few inverse/leveraged ETFs of last week.
ETFs in Focus Inverse Leveraged Energy
Microsectors U.S. Big Oil Index -3X ETN (
NRGD Quick Quote NRGD - Free Report) – Up 27.1%
Ultrashort Bloomberg Natural Gas -2X ETF (
KOLD Quick Quote KOLD - Free Report) – Up 26.1%
Oil ended the week considerably lower as traders worried that future U.S. interest rate hikes could lead to considerable growth slowdown and wreak havoc on demand. Growing signs of large crude and fuel supply made investors nervous.
Graniteshares Coinbase 1.5X Daily ETF (
CONL Quick Quote CONL - Free Report) – Up 20.9%
Bitcoin, the largest digital currency by market value, topped $25,000 for the first time since mid-2022. It jumped 8.2% on Feb 16, marking the biggest one-day gain in about a month. The solid rally was the result of the type of short squeeze that historically sent Bitcoin prices higher. Per the data from crypto data provider, Coinglass, investors liquidated some $60 million of bitcoin short positions over the past 24 hours (read:
Bitcoin Regains $25,000 Level: ETFs to Ride the Rally). Leveraged Disruptive Innovation ETFs
Axs 2X Innovation ETF (
TARK Quick Quote TARK - Free Report) – Up 12.8%
The fund offers exposure to next-gen internet, electric vehicles, genomics, fintech. The fund issuer says that if one believes that the bullish proposition for disruptive innovation will remain maintained and growth stock valuations have reached attractive levels, then TARK should be an intriguing bet. Since next-gen internet, digital economy and electric vehicle investing have been faring better since the start of this year, TARK had every reason to outperform last week
Inverse/Leveraged Paypal ETFs
Axs -1.5X Pypl Daily ETF – Up 12.8%
PayPal (PYPL) lost about 7.5% last week as the company came up with mixed earnings. PayPal is also on job-cut mode. Its CEO too will leave the company at the end of 2023.