Fed's Favorite Inflation Gauge Arrives Thursday: 5 ETFs To Watch
Portfolio Pulse from Piero Cingari
The Bureau of Economic Analysis is set to release the October Personal Consumption Expenditure (PCE) index, the Fed's preferred inflation gauge. Investors anticipate a decrease in the year-on-year headline PCE from 3.4% to 3% and a month-over-month increase of 0.1%. The core PCE is expected to show a year-on-year increase of 3.5% and a month-over-month increase of 0.2%. The CME Group’s FedWatch tool indicates a 78% probability of a rate increase by May 2024 and up to five rate cuts by December 2024. ETFs to watch include TLT, QQQ, GLD, ARKK, and MAGS, which have shown strong performance this month.
November 29, 2023 | 9:57 pm
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NEUTRAL IMPACT
ARK Innovation ETF (ARKK) experienced a 33% rise in November, its best month since inception. PCE data may impact ARKK's innovative stock holdings.
ARKK's performance is tied to high-growth tech stocks, which can be sensitive to inflation data and interest rate expectations, but predicting the exact impact is challenging.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
SPDR Gold Trust (GLD) increased by 3% this month, following a 7.4% rise in October. The PCE data could affect gold prices and GLD's trajectory.
Gold and GLD are traditionally seen as inflation hedges. The PCE data could reinforce or weaken this view, but the effect is not straightforward.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
Roundhill Magnificent Seven ETF (MAGS) gained 7% this month. The PCE data release could influence its holdings in major tech companies.
MAGS, which includes major tech stocks, may be affected by the PCE data as it could alter the economic outlook and tech sector investment sentiment.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
Invesco QQQ Trust (QQQ) rose by 11% this month, nearing all-time highs. The PCE data may affect investor sentiment and the tech-heavy index's performance.
While QQQ has shown strong performance, the PCE data could influence tech sector investment decisions, but the impact is uncertain due to mixed expectations.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
iShares 20+ Year Treasury Bond ETF (TLT) had a 10.8% gain this month, its best since September 2011. The upcoming PCE data could influence bond prices and TLT's performance.
The PCE data could impact bond yields, which inversely affect TLT. However, the ETF's performance also depends on broader market trends and Fed policy actions.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70