U.S. Dollar at Four-Week Low: ETFs to Benefit
Zacks Investment Research | Apr 16, 2021 08:00AM ET
The U.S. dollar dropped to a four-week low against other major currencies on Apr 15 as U.S. Treasury yields moderated, with investors increasingly betting on the fact the Federal Reserve will keep interest rates at the rock-bottom levels in the near term.
Most importantly, despite the upbeat economic data, U.S. benchmark treasury yields dropped to 1.56% at the close on Apr 15 from 1.64% recorded the day earlier. The yield is now down from the month’s closing high of 1.73%.
This is especially true given the fact that the U.S. inflation in March came in strong, but not sturdy enough to modify the Federal Reserve’s easy money policy, per market experts. Annual inflation rate in the United States rose to 2.6% in March 2021 from 1.7% in the previous month and SPY added 0.7% past week.
h3 Metal ETFs/h3While reopening of economies would boost manufacturing activities thus benefiting base metal ETFs, a still-edgy investing backdrop would continue to favor precious metal gold prices too. Metal investing is great in a weaker dollar environment as these commodities are priced in the greenback.
Investors can thus expect a pickup in Invesco DB Base Metals Fund TIP .TIPS ETFs offer robust real returns during inflationary periods unlike its unprotected peers in the fixed-income world.
These securities pay an interest on an inflated-principal amount (principal rises with inflation) and when the securities mature, investors get either the inflation-adjusted principal or the original principal, whichever is greater. As a result, both principal amount and interest payments will keep on increasing with rising consumer prices. The fund is up 0.2% in the past five days (read: Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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