We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
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.
The Federal Reserve chief Powell indicated yesterday that the U.S. central bank may raise interest rates farther and faster than previously expected in order to tame inflation as the latest economic data points came in stronger than expected. U.S. prices jumped an unexpected 0.5% from December to January, while monthly retail sales and jobs data have been stronger than expected.
Over the last year, the Fed has raised its benchmark rate to more than 4.5% -- the highest rate since 2007 - responding to prices rising at the fastest clip in decades. Powell said that he could push the bank to hike rates above the 5% to 5.5% officials had forecast in December. Markets are now pricing in an almost 70% probability of a 50-basis point rate hike at the Fed's March 21-22 policy meeting, according to CME's FedWatch tool, up from about a 30% a day ago, per Reuters.
"Powell has essentially opened the door to 50 basis point hike," said Chris Weston, head of research at Pepperstone, as quoted on Reuters. Shorter-term Treasury yields continued its rise on Mar 7, 2023. Six-month U.S. treasury yields spiked 10 bps from the day before to 5.32% on Mar 7, 2023. The U.S. 10-year benchmark treasury yields fell one-bp to 3.97% on Mar 7, 2023 due to the flight to safety.
In response to Powell’s comments,SPDR S&P 500 ETF Trust (SPY - Free Report) , SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) and Invesco QQQ Trust (QQQ - Free Report) lost about 1.53%, 1.74% and 1.23% on Mar 7, 2023, respectively.
Against this backdrop, below we highlight a few ETF areas that gained yesterday.
The underlying Barclays Global Carbon II TR USD Index seeks to provide exposure to the price of carbon as measured by the return of futures contracts on carbon emissions credits from the European Union Emission Trading Scheme and the Kyoto Protocol Clean Development Mechanism. The fund charges 75 bps in fees.
Going green has become the mantra to save the earth. Some companies are trying to reduce their carbon footprint voluntarily. Another way for companies to manage their carbon footprint is to buy and sell emission allowances. In the cap-and-trade system, a government sets a limit on overall emissions that is tightened over time. Big carbon emitters need to buy these pollution permits to stay under regularity caps. Such initiatives have boosted carbon-allowance exchange-traded products.
The Simplify Managed Futures Strategy ETF seeks long term capital appreciation by systematically investing in futures in an attempt to create an absolute return profile, that also has low correlation to equities, and can provide support in risk-off events. The fund yields 3.78% annually and charges 75 bps in fees. While the fund offers decent yields, it helps investors adopt risk-off trades.
Long/Short ETFs
Noble Absolute Return ETF – Up 1.4%
The fund is likely to offer absolute returns over a full market cycle. The fund offers long positions in best securities with improving circumstances while it takes short positions in best securities with deteriorating circumstances. The fund’s expense ratio is 1.82%.
To bypass the equity market weakness, investors normally rev up their exposure to long/short ETFs as as these offer ways to seek profits and protection simultaneously.
The underlying S&P 500 VIX Short-Term Futures Index Total Return offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index. The fund charges 89 bps in fees. Due to Powell’s hawkish comments, volatility levels have crept up in the market.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Powell Pulls Up These ETF Areas
The Federal Reserve chief Powell indicated yesterday that the U.S. central bank may raise interest rates farther and faster than previously expected in order to tame inflation as the latest economic data points came in stronger than expected. U.S. prices jumped an unexpected 0.5% from December to January, while monthly retail sales and jobs data have been stronger than expected.
Over the last year, the Fed has raised its benchmark rate to more than 4.5% -- the highest rate since 2007 - responding to prices rising at the fastest clip in decades. Powell said that he could push the bank to hike rates above the 5% to 5.5% officials had forecast in December. Markets are now pricing in an almost 70% probability of a 50-basis point rate hike at the Fed's March 21-22 policy meeting, according to CME's FedWatch tool, up from about a 30% a day ago, per Reuters.
"Powell has essentially opened the door to 50 basis point hike," said Chris Weston, head of research at Pepperstone, as quoted on Reuters. Shorter-term Treasury yields continued its rise on Mar 7, 2023. Six-month U.S. treasury yields spiked 10 bps from the day before to 5.32% on Mar 7, 2023. The U.S. 10-year benchmark treasury yields fell one-bp to 3.97% on Mar 7, 2023 due to the flight to safety.
In response to Powell’s comments,SPDR S&P 500 ETF Trust (SPY - Free Report) , SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) and Invesco QQQ Trust (QQQ - Free Report) lost about 1.53%, 1.74% and 1.23% on Mar 7, 2023, respectively.
Against this backdrop, below we highlight a few ETF areas that gained yesterday.
ETF Areas in Focus
Carbon Allowance
iPath Series B Carbon ETN (GRN - Free Report) – Up 3.5%
The underlying Barclays Global Carbon II TR USD Index seeks to provide exposure to the price of carbon as measured by the return of futures contracts on carbon emissions credits from the European Union Emission Trading Scheme and the Kyoto Protocol Clean Development Mechanism. The fund charges 75 bps in fees.
Going green has become the mantra to save the earth. Some companies are trying to reduce their carbon footprint voluntarily. Another way for companies to manage their carbon footprint is to buy and sell emission allowances. In the cap-and-trade system, a government sets a limit on overall emissions that is tightened over time. Big carbon emitters need to buy these pollution permits to stay under regularity caps. Such initiatives have boosted carbon-allowance exchange-traded products.
Hedge Fund ETFs
Simplify Managed Futures Strategy (CTA - Free Report) – Up 2.7%
The Simplify Managed Futures Strategy ETF seeks long term capital appreciation by systematically investing in futures in an attempt to create an absolute return profile, that also has low correlation to equities, and can provide support in risk-off events. The fund yields 3.78% annually and charges 75 bps in fees. While the fund offers decent yields, it helps investors adopt risk-off trades.
Long/Short ETFs
Noble Absolute Return ETF – Up 1.4%
The fund is likely to offer absolute returns over a full market cycle. The fund offers long positions in best securities with improving circumstances while it takes short positions in best securities with deteriorating circumstances. The fund’s expense ratio is 1.82%.
To bypass the equity market weakness, investors normally rev up their exposure to long/short ETFs as as these offer ways to seek profits and protection simultaneously.
Volatility
iPath.B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) – Up 2.2%
The underlying S&P 500 VIX Short-Term Futures Index Total Return offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index. The fund charges 89 bps in fees. Due to Powell’s hawkish comments, volatility levels have crept up in the market.