Home » Bonds & ETF Market Outlook (April 20): Federal Reserve may start increasing interest rates in order to cool off the economy
The Federal Reserve is turning hawkish, which means that they may start increasing interest rates in order to cool off the economy. This will be bad news for stocks because it could lead investors into safer assets like bonds or dollars while keeping inflation low – but there’s still time before these changes happen!
The 10-year Treasury Inflation indexed security (TIIS) yield had been in negative territory since March 2020, when the Federal Reserve slash interest rates to near zero. That changed on Tuesday after it ticked above positive numbers at just under 1%.
Negative 10-year Treasury Bond means that investors lose their money on an annualized basis when buying, but that dynamic should help to redirect capital from U.S government bonds into stocks. That would support indexes such as SPX which is now more than doubled from its post pandemic low.
The expectation of tighter monetary policy has pushed yields higher and pushed stocks in comparison to Treasuries, which are viewed as much less risky and worthy.
On the ETF side, this week’s top performer is ProShares UltraPro Short QQQ with +4.42% gains as of Thursday morning.
The ProShares Ultra VIX Short-Term Futures ETF tracks the short term futures markets, providing protection against sharp movements in volatility lost 3.54% and its price is now 11.70$.