What A Difference A Week Makes: ETF Charts You Must Know #2
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What a difference a week makes, as expectations for higher interest rates reverberate through the US equity markets. Which ETFs are doing well, and which aren’t?
- US equities come off their highs, with high beta bearing the worst of it
- High beta equity ETFs continue to under perform the S&P 500, with QQQ and IWM some way off their previous highs
- US sector ETF performance is beginning to diverge as the interest rate environment changes
- Financials (XLF), Energy (XLE), and Consumer Staples (XLP) remain very bullish
- Real Estate (XLRE) and Utilities (XLU) are exposed to continued sell offs should interest rates continue to rise
- Can we say that risk sentiment is strong if “boring” large cap, low beta consumer staples stocks are doing so well?
- European and EM equities are still lackluster relative to US equities, although Chinese large caps have been attempting to rally (how far can this go with the Evergrande contagion still raging?)
- Fixed income ETFs are still reflecting expectations for higher interest rates
- Corporate bond ETFs LQD and HYG are moving lower (yields moving higher)
- Emerging Markets sovereign bonds (EMB) too, although this is more a reflection of global USD liquidity conditions
- Even TLT has broken out of its up trend as long dated US Treasury yields rally to test last year’s highs
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