Will Jerome Powell Be Hawkish Or Dovish? How These 5 ETFs Could React To The Fed's Rate Decision Wednesday
Portfolio Pulse from Piero Cingari
Investors are awaiting the Federal Open Market Committee (FOMC) meeting’s interest rate decision, which is expected to have a significant impact on the market. The market has already priced in a 25-basis-point rate hike. A hawkish attitude from Fed Chair Jerome Powell would likely catch markets off guard, while a dovish stance might solidify existing market expectations. Five major ETFs that are likely to see significant activity in reaction to the Fed interest rate decision are Invesco DB USD Index Bullish Fund ETF (UUP), iShares 20+ Year Treasury Bond ETF (TLT), SPDR Gold Trust (GLD), iShares Russell 1000 Growth ETF (IWF), and ProShares Trust VIX Short-Term Futures ETF (VIXY).
July 25, 2023 | 4:20 pm
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NEUTRAL IMPACT
The GLD ETF is impacted by the Federal Reserve’s interest rate decisions. A hawkish Fed puts downward pressure on gold prices, while a dovish Fed could boost gold prices.
The GLD ETF tracks the price of gold and is therefore directly impacted by the Fed's monetary policy decisions.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEUTRAL IMPACT
The IWF ETF, which tracks growth stocks, could be impacted by the Fed's stance on inflation and interest rate hikes. A hawkish Fed could jeopardize growth stocks, while a dovish Fed could benefit them.
The IWF ETF tracks growth stocks and is therefore directly impacted by the Fed's monetary policy decisions.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEUTRAL IMPACT
The TLT ETF is sensitive to interest rate changes and the Federal Reserve’s policy stance. A hawkish Fed poses troubles for long-term bonds, while a dovish Fed tends to push down long-term bond yields.
The TLT ETF tracks long-dated U.S. Treasury bonds and is therefore directly impacted by the Fed's monetary policy decisions.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEUTRAL IMPACT
The UUP ETF is likely to witness immediate reactions following the Fed meeting. A hawkish Fed stance is likely to bolster the U.S. currency, while a dovish stance could signal the end of policy tightening.
The UUP ETF tracks the performance of the U.S. dollar index and is therefore directly impacted by the Fed's monetary policy decisions.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEUTRAL IMPACT
The VIXY ETF, which tracks market volatility, could be impacted by the Fed's monetary policy decisions. A hawkish Fed could trigger market instability and increase volatility.
The VIXY ETF tracks market volatility and is therefore directly impacted by the Fed's monetary policy decisions.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100