The US government bond market sold off on Tuesday while stocks wererallying as comments from Federal Reserve officials added to expectations of aggressive action against the inflation.
With inflation on their minds, both Charles Evans and James Bullard (president of the St Louis branch of the Fed) have said that the Federal Reserve may need to raise interest rates sooner rather than later.
They’re likely going to raise rates between 2.25% and 2.5%, but they may need more if inflation persistently remains high.
Treasury Yield 10 Years
The yield on the 10-year Treasury note indexed to inflation, real yield as it’s also called, has just moved into positive territory for a first time since March 2020.
The Real Yield continued its upward trend this year as policy tightening from The Fed led to higher rates more generally and increased pressure in risky parts of financial markets.
On the ETF side, the iShares Russell 2000 ETF (IWM) is up 1.99%.
This comes after a strong week for the index, which is up 2.67% year-to-date.
The IWM has benefited from exposure to small cap stocks, which have outperformed large caps this year.
S&P 500 ETF
S&P 500 Index funds are up 1.61%. The SPDR S&P 500 ETF is one of the most traded ETFs and it tracks the S&P 500 Index.
With a 2.24% increase, the Invesco QQQ Trust (QQQ) is one of the top performers today.
The JNUG saw a 5.16% dip today. This marks a downward trend for the mining industry as a whole. Investors will be keeping a close eye on this sector in the coming days.
The iShares Silver Trust (SLV) is down 2.64% today. This exchange-traded fund tracks the price of silver, and is a popular way for investors to gain exposure to this precious metal. With silver prices down sharply today, it’s no surprise that the SLV is taking a hit.
Investors were caught off guard by the sudden drop in the UVXY, indeed the ProShares Ultra VIX Short-Term Futures ETF (UVXY) plunged 7.55% today.
Investors were pleased with the performance of ProShares UltraPro QQQ (TQQQ) today, as the stock rose 6.43%. This was a welcome relief after yesterday’s decline, and investors are hoping that the trend will continue.
