iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ: EMB)

Ultime notizie per iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:EMB)

iShares J.P. Morgan USD Emerging Markets Bond ETF

The fund generally will invest at least 90% of its assets in the component securities of the underlying index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in securities not included in the underlying index. The index is a broad, diverse U.S. dollar-denominated emerging markets debt benchmark that tracks the total return of actively traded external debt instruments in emerging market countries.

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The bond market of emerging economies has experienced a strong upswing in recent sessions, driven by rising expectations that the Federal Reserve is nearing a policy shift <a href="https://www.benzinga.com/topic/interest-rates">toward cutting interest rates.</a>
The iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NYSE">EMB</a>), which tracks dollar-denominated bonds from around 30 emerging-market governments, has rallied to levels last seen in May 2022, recording gains in nine of the last ten sessions.
Similarly, the iShares J.P. Morgan EM Local Currency Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LEMB#NYSE">LEMB</a>), which invests in local-currency-denominated bonds from emerging markets, has climbed to a one-year high.
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="548" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/20154315/image-172-1024x548.png" alt="" class="wp-image-504542" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/20154315/image-172-1024x548.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/20154315/image-172-300x161.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/20154315/image-172-768x411.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/20154315/image-172-1536x822.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/08/20154315/image-172.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h3 class="wp-block-heading">EM Bonds Rally As Traders Eye Lower U.S. Interest Rates: Dollar Weakens</h3>
Much of this outperformance in the local currency sovereign bond market has been concentrated in Latin America and in countries like Mexico, Brazil, and Poland, which have struggled for much of this year, according to Tadas Gedminas, an analyst at Goldman Sachs.
Gedminas also highlighted that &#8220;diminishing U.S. growth exceptionalism and greater confidence in the start of the Fed&#8217;s easing cycle should ease constraints on emerging market policymakers and support a broader cycle of rate cuts across these economies.&#8221; 
Goldman Sachs anticipates that central banks in South Korea, South Africa, and India will begin easing policy rates before the year ends.
Traders are fully pricing in a U.S. rate cut in September, with market-implied probabilities suggesting a 73% chance of a 25-basis-point cut, with additional reductions expected in November and December.
On the currency front, the U.S. dollar has weakened in August, particularly against Asian currencies. 
The greenback has fallen by 5% month-to-date against the Indonesian rupiah, marking the rupiah&#8217;s best-performing month since April 2020. 
The dollar has also depreciated by between 3% and 4% against the Malaysian ringgit, Thai baht, Philippine peso, and Korean won. 
In Latin America, the dollar has dropped by over 3% this month against the Brazilian real, on track to end a streak of seven consecutive months of strengthening.
<h3 class="wp-block-heading">Improving Capital Inflows Into EM Economies</h3>
An International Monetary Fund (IMF) report released last week highlighted a slight recovery in net capital inflows to emerging markets and developing economies from the lows experienced in 2022, although they remained negative overall in 2023. 
Excluding China, which continued to account for a large share of negative net capital inflows, other emerging markets as a group saw positive and increasing inflows.
High-frequency data from the IMF indicate that gross portfolio inflows into emerging markets, excluding China, were positive in the first few months of 2024. 
These inflows were influenced by &#8220;fluctuations in U.S. financial conditions, with optimism in financial markets and the limited depreciation of the U.S. dollar in the fourth quarter of 2023 helping to rekindle capital inflows to emerging markets,&#8221; the Fund wrote. 
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Emerging Market Bonds Climb To Over 2-Year High Driven By Weaker Dollar, Fed's Interest Rate Shift

Investors are growing increasingly concerned about the potential impact of the <a href="https://www.benzinga.com/news/24/04/38104382/serious-debate-needed-to-avert-2025-us-debt-crisis-warns-wharton-expert">mounting U.S. debt</a> on the bond market, with the issue expected to take center stage as the presidential election approaches.
What Happened: The U.S. government&#8217;s debt is expected to balloon, potentially overshadowing an anticipated bond rally. This is due to the ongoing large fiscal deficits, which show no signs of abating ahead of the presidential election, Reuters reported on Friday.
Investors are already adjusting their portfolios to mitigate potential losses if Treasury yields surge due to supply and demand imbalances. There are also concerns that the uncertainty surrounding the necessary debt for deficit spending could destabilize the $27 trillion Treasury market, a cornerstone of the global financial system.
Despite the focus on the Federal Reserve&#8217;s potential interest rate cuts, analysts and investors anticipate that fiscal concerns will become more pronounced as the election nears. Both President Joe Biden and Republican candidate Donald Trump have not made reducing deficit spending a priority, according to the report.
See Also: <a href="https://www.benzinga.com/news/24/05/38955491/mohamed-el-erian-and-bitcoin-critic-peter-schiff-highlight-golds-soaring-prices-and-market-momentum?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Mohamed El-Erian And Bitcoin-Critic Peter Schiff Highlight Gold&#8217;s Soaring Prices And Market Momentum: &#8216;Just Sit Tight And Enjoy The Ride&#8217;</a>
Why It Matters: The concerns over rising U.S. debt come amid a broader financial landscape marked by significant shifts. On May 16, disinflation hopes began reshaping Treasury yields, with expectations of Federal Reserve rate cuts influencing market trends.
This shift contributed to an optimistic sentiment about <a href="https://www.benzinga.com/general/macro-notification/24/05/38880563/disinflation-hopes-reshape-treasury-yields-major-trend-5-bond-etfs-poised-to-rally-on-">potential rallies in bond ETFs</a>, such as the Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>) and iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>).
Additionally, the <a href="https://www.benzinga.com/news/earnings/24/05/38916165/nasdaq-s-p-500-futures-keep-head-above-water-ahead-of-fed-speeches-analyst-says-market-boosting-the">S&amp;P 500 and Nasdaq futures</a> showed resilience ahead of key Federal Reserve speeches, indicating a market buoyed by optimism. This positive sentiment was reflected in the performance of major indices like the Invesco QQQ Trust, Series 1 (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>), and SPDR S&amp;P 500 (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>).
Read Next: <a href="https://www.benzinga.com/news/earnings/24/05/38960399/wall-street-braces-for-subdued-start-ahead-of-nvidia-earnings-fed-minutes-analyst-cautions-about-gu?itm_source=parsely-api" target="_blank" rel="noreferrer noopener">Why Nasdaq, S&amp;P 500 Futures Are Flatlining Wednesday</a>
Photo by Austin Distel on Unsplash
This story was generated using <a href="https://www.benzinga.com/author/benzinga-neuro">Benzinga Neuro</a> and edited by <a href="https://www.benzinga.com/topic/Pooja-Rajkumari" target="_blank" rel="noreferrer noopener">Pooja Rajkumari</a>

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Investors Fear Mounting US Debt Could Overshadow Bond Rally Ahead Of Presidential Elections

A major trend shift is unfolding in the bond market, as key Treasury yields are currently testing the support of the crucial 200-day moving average, following the release of benign economic data that has cemented investor bets on <a href="https://www.benzinga.com/markets/equities/24/05/38842603/us-inflation-falls-as-expected-in-april-bolsters-fed-rate-cut-bets">Federal Reserve rate cuts.</a>
Last month, the inflation rate calculated using the consumer price index (CPI) came in at 3.4% compared to the same month last year, down from 3.5% in March, and in line with the forecasted 3.4% increase. The &#8220;core&#8221; inflation rate, which excludes volatile energy and food prices, also matched estimates, falling from 3.8% to 3.6%.
April's inflation reading has raised hopes that the disinflation trend may restart after three consecutive higher-than-predicted CPI readings in the first quarter. 
In his recent comments, Federal Reserve Chair Jerome Powell downplayed concerns about a possible hike in interest rates, signaling that the next adjustment would likely be a reduction. However, he emphasized this cut might come later than the markets initially anticipated.
Money markets are currently factoring in a 50 basis point reduction in interest rates by the end of the year, with a 70% chance for the Federal Reserve to begin its loosening cycle in September.
<h1 class="wp-block-heading">Treasury Yields Eye 200-Day Moving Average Support</h1>
The yield on the benchmark 10-year Treasury note traded at around 3.36% on Thursday, hitting an intraday low of 3.31%, temporarily sliding below the 200-day average positioned at 3.33%. 
Similarly, yields on both 2-year and 30-year Treasury notes are currently testing the support of the 200-day average.
The 200-day moving average is a widely watched technical indicator that helps investors gauge the long-term trend of a security or index. 
When Treasury yields fall below this level, it often signals a bearish or downward trend, suggesting that investors are seeking safer assets amid expectations of a slowing economy or lower interest rates. This shift can create a more favorable environment for bond prices, which move inversely to yields.
Here&#8217;s a snapshot of the current yield levels compared to their 200-day moving averages, as well as their 2024 high-to-low range. 
<figure class="wp-block-table is-style-stripes"> 
<table>
<thead>
<tr>
<th>Maturity</th>
<th>Current Yield</th>
<th>200-day Moving Average</th>
<th>2024 Peak</th>
<th>2024 Low</th>
</tr>
</thead>
<tbody>
<tr>
<td>2 year</td>
<td>4.78%</td>
<td>4.75%</td>
<td>5.05%</td>
<td>4.12%</td>
</tr>
<tr>
<td>5 year</td>
<td>4.39%</td>
<td>4.35%</td>
<td>4.75%</td>
<td>3.75%</td>
</tr>
<tr>
<td>10 year</td>
<td>4.36%</td>
<td>4.33%</td>
<td>4.74%</td>
<td>3.82%</td>
</tr>
<tr>
<td>30 year</td>
<td>4.50%</td>
<td>4.48%</td>
<td>4.85%</td>
<td>4.07%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated as of May 16, 2024 (11:45 a.m. EDT) </figcaption></figure>
<h1 class="wp-block-heading">Chart: Inflation Data Casts Doubt On 10-Year Treasury Yield&#8217;s 2024 Rising Trend</h1>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1024x495.png" alt="" class="wp-image-341796" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/05/16112728/image-70.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read Also: <a href="https://www.benzinga.com/economics/macro-economic-events/24/05/38873168/us-inflation-data-prematurely-released-by-accident-yet-traders-missed-golden-oppo">US Inflation Data Prematurely Released By Accident, Yet Traders Missed Golden Opportunity</a>
<h1 class="wp-block-heading">Bond ETFs Set To Rally</h1>
The shift in Treasury yields has set the stage for a rally in bond ETFs, especially those focused on long-duration bonds. 
Here are five bond ETFs poised to benefit from rising expectations of Fed rate cuts:
<ol>
<li>iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>): This ETF tracks long-term U.S. Treasury bonds and is particularly sensitive to changes in interest rates. With long-dated yields falling, TLT could see sharp gains as it moves inversely to yields. In reaction to April&#8217;s inflation data, it rose 1.4% on the day.</li>
<li>Vanguard Total Bond Market Index Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BND#NYSE">BND</a>): A broader option, BND includes a mix of short-, medium-, and long-term bonds. Its diversified approach makes it a stable choice as market sentiments shift. Following the latest inflation statistics, BND inched 0.6% higher.</li>
<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQD#NYSE">LQD</a>): As rate cut expectations strengthen, investment-grade corporate bonds could see price increases. LQD offers exposure to this segment.</li>
<li>SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>): Higher risk and higher reward, JNK covers the high-yield, or &#8220;junk,&#8221; bond market. Rate cuts often boost these bonds as investors hunt for yield.</li>
<li>iShares J.P. Morgan USD Emerging Market Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NYSE">EMB</a>): As Treasury yields retreat and the Fed hints at a slower pace for rate hikes, emerging markets bonds could benefit from increased investor appetite for higher-yielding assets. Notably, EMB rose 1.1% on Wednesday, positively reacting to inflation data. </li>
</ol>
Read Now: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/05/38850154/economists-react-to-inflation-retail-sales-the-soft-landing-narrative-is-still-a-po">Economists React To Inflation, Retail Sales: &#8216;The Soft Landing Narrative Is Still A Possibility But Not A Guarantee&#8217;</a>
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Disinflation Hopes Reshape Treasury Yields' Major Trend: 5 Bond ETFs Poised To Rally On Fed Rate Cuts

In recent weeks, several bond exchange-traded funds (ETFs) have experienced a significant surge in inflows, indicating a <a href="https://www.benzinga.com/money/best-bond-etf">heightened interest among investors. </a>
This shift coincided with a market that significantly upped bets on Federal Reserve rate cuts for 2024, backed by a robust and ongoing <a href="https://www.benzinga.com/topic/inflation">disinflationary trend</a> in the U.S. economy. 
Speculators have gone as far as factoring in an initial rate cut as early as March 2024, with whispers of a total of five rate cuts by December 2024.
But which bond ETFs are currently piquing investors&#8217; interest?
<h2 class="wp-block-heading">From &#8216;Cash-Like&#8217; to &#8216;Equity-Like&#8217;</h2>
While the third quarter in 2023 witnessed a notable uptick in inflows into cash-linked bond ETFs, primarily those investing in short-dated Treasury bonds and bills, the latest trends are veering towards more aggressive fixed-income strategies.
Investors are strategically positioning themselves in anticipation of an imminent U-turn in Fed&#8217;s monetary policy stance, eyeing a select group of bond ETFs that have weathered the storm during the recent spate of interest rate hikes.
Their bullish stance on riskier bond ETFs underscores a burgeoning belief that the bond market landscape could undergo a substantial recalibration in the coming months, as they brace for a more accommodating monetary policy environment.
These ETFs encompass a diverse range, including long-term Treasury bonds, emerging-market bonds, and high-yield corporate bonds. 
<h2 class="wp-block-heading">Top 10 Bond ETFs by Fund Inflows in the Past Month</h2>
<figure class="wp-block-table"> 
<table>
<thead>
<tr>
<th>Name</th>
<th>Fund Flows (1-month)</th>
</tr>
</thead>
<tbody>
<tr>
<td>iShares Trust &#8211; iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYG#NYSE">HYG</a>)</td>
<td>$3.69 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares Core U.S. Aggregate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AGG#NYSE">AGG</a>)</td>
<td>$2.62 bn</td>
</tr>
<tr>
<td>SPDR Series Trust &#8211; SPDR Bloomberg High Yield Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNK#NYSE">JNK</a>)</td>
<td>$1.99 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>)</td>
<td>$1.89 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares 20+ Year Treasury Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NASDAQ">TLT</a>)</td>
<td>$1.62 bn</td>
</tr>
<tr>
<td>Vanguard Bond Index Funds &#8211; Vanguard Total Bond Market ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BND#NASDAQ">BND</a>)</td>
<td>$1.56 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares Broad USD High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/USHY#NYSE">USHY</a>)</td>
<td>$1.31 bn</td>
</tr>
<tr>
<td>Vanguard Scottsdale Funds &#8211; Vanguard Long-Term Treasury ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VGLT#NASDAQ">VGLT</a>)</td>
<td>$665.99 bn</td>
</tr>
<tr>
<td>Vanguard Charlotte Funds &#8211; Vanguard Total International Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BNDX#NASDAQ">BNDX</a>)</td>
<td>$641.06 bn</td>
</tr>
<tr>
<td>iShares Trust &#8211; iShares 5-10 Year Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IGIB#NYSE">IGIB</a>)</td>
<td>$216.67 bn</td>
</tr>
</tbody>
</table>
</figure>
Read Now: <a href="https://www.benzinga.com/etfs/specialty-etfs/23/12/36075348/golds-record-high-why-havent-gold-miners-followed-suit">Gold&#8217;s Record High: Why Haven&#8217;t Gold Miners Followed Suit?</a>
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Investors Pour Billions To Aggressive Bond ETFs, Banking On Multiple Fed Rate Cuts in 2024

With escalating interest rates and inflationary pressures, the resiliency of bond investments is being put to the test. Investors find themselves watching helplessly as bond prices undergoe a relentless downward spiral, battered by the unrelenting blows <a href="https://www.benzinga.com/money/what-is-a-bond">of surging borrowing costs.</a>
The tumultuous events of 2022 bear witness to this challenge, as the global bond market endured one of its most turbulent years on record. Hopes were high for a turnaround at the onset of 2023, yet reality proved otherwise. The bond market&#8217;s sell-off persisted with Treasury yields soaring to multi-decade highs. 
The 10-year Treasury yield briefly hit 4.33% yield this week, surging to levels last seen in October 2022, and in 2007, while the duration-sensitive 30-year yield hit 4.42%, the highest since the summer of 2011. 
<h2 class="wp-block-heading">Chart: US Treasury Yields Soared In August</h2>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="845" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/18123539/US10Y_2023-08-18_18-35-24_e8c31-1024x845.png" alt="" class="wp-image-90336" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/18123539/US10Y_2023-08-18_18-35-24_e8c31-1024x845.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/18123539/US10Y_2023-08-18_18-35-24_e8c31-300x248.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/18123539/US10Y_2023-08-18_18-35-24_e8c31-768x634.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/18123539/US10Y_2023-08-18_18-35-24_e8c31.png 1309w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
These yields acted as a gravitational force, exerting influence over the broader bond market. As the world&#8217;s preeminent risk-free rate witnesses a surge, a chain reaction is set in motion, resulting in a universal uptick in bond yields that spares no issuer.
However, as with every trade-off, there&#8217;s a catch. Witnessing bond markets yielding close to or surpassing the 6% annual mark – not far from the Dow Jones Index&#8216;s 6.6% annualized return over the past three decades – is sparking the interest of even those who once regarded bonds as a sacrificial lamb to the inflationary onslaught.
Indeed, while the Federal Reserve remains steadfast in its stance against short-term rate reductions, a downward trend in inflation has also taken shape over the past year. This, in turn, has given rise to positive &#8220;real rates&#8221; in the bond market – a configuration largely foreign to an era defined by ultra-accommodative monetary policies and rates that hovered perilously close to zero.
Read now: <a href="https://www.benzinga.com/money/how-to-buy-treasury-bonds">How to Buy Treasury Bonds</a>
<h2 class="wp-block-heading">What Does The Yield To Maturity Mean For A Bond ETF?</h2>
In the universe of bond investing, the concept of yield to maturity (YTM) reigns supreme, representing the potential annualized return an investor may glean from holding a bond until its maturity date.
However, when applied to the intricate world of exchange-traded funds (ETFs) housing an array of bonds, caution must be exercised. While the YTM offers a glimpse into the potential return from holding an ETF until its underlying bonds reach maturity, the reality rarely involves such a straightforward definition, since bond ETFs do not commonly hold securities until maturity. 
One should note that the YTM assumes reinvestment of coupon payments at the same yield, an assumption not always perfectly aligned with real-world scenarios.
Nonetheless, despite its intricacies, the YTM remains a valuable benchmark for assessing the comparative potential of various bond ETFs, offering investors an informative lens through which to evaluate potential returns.
<h2 class="wp-block-heading">5 Bond ETFs Delivering Over 6% Yield To Maturity</h2>
<ol>
<li>iShares BBB Rated Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LQDB#NYSE">LQDB</a>)</li>
</ol>
Attractive yields are not exclusive to the realm of speculative securities. Enter American BBB-rated corporate bonds – the last frontier before crossing into high-yield territory. With the iShares BBB Rated Corporate Bond ETF, investors gain access to an index comprising BBB (or equivalent) fixed-rate U.S. dollar-denominated bonds issued by corporate entities, both domestic and international.
<ul>
<li>Average Yield to Maturity: 5.94% as of Aug. 17, 2023</li>
<li>Year-to-date Return: 1.43%</li>
<li>Expense Ratio: 0.15%</li>
</ul>
2. iShares 10+ Year Investment Grade Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IGLB#NYSE">IGLB</a>)
Venturing deeper into investment-grade territory, extending maturity to over a decade unveils yields of 6%. The iShares 10+ Year Investment Grade Corporate Bond ETF provides exposure to U.S. dollar-denominated investment-grade corporate bonds with maturities surpassing 10 years.
<ul>
<li>Average Yield to Maturity: 5.97% as of Aug. 17, 2023</li>
<li>Year-to-date Return: 0.17%</li>
<li>Expense Ratio: 0.04%</li>
</ul>
3. iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/HYG#NYSE">HYG</a>)
Descending further into the hierarchy, the &#8220;high yield&#8221; realm beckons, offering higher potential returns in tandem with elevated risk – adhering to investment&#8217;s age-old adage. The iShares iBoxx $ High Yield Corporate Bond ETF tracks an index comprising U.S. dollar-denominated high-yield corporate bonds.
<ul>
<li>Average Yield to Maturity: 8.53% as of Aug. 17, 2023</li>
<li>Year-to-date Return: 4.75%</li>
<li>Expense Ratio: 0.49%</li>
</ul>
4. BondBloxx CCC Rated USD High Yield Corporate Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XCCC#NYSE">XCCC</a>)
Venturing closer to the brink of default, the realms of CCC, CC, and C ratings herald the epitome of high-yield. Reflecting the poor credit quality of these enterprises, yields surge even higher. 
The BondBloxx CCC Rated USD High Yield Corporate Bond ETF tracks bonds rated CCC1 through CCC3, forming an average based on major rating agencies. With risk at the forefront, issuer exposure is capped at 2% of the portfolio&#8217;s weight.
<ul>
<li>Average Yield to Maturity: 13.02% as of Aug. 17, 2023</li>
<li>Year-to-date Return: 2.98%</li>
<li>Expense Ratio: 0.40%</li>
</ul>
5. iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NYSE">EMB</a>)
Shifting our gaze to the exotic world of emerging markets, the realm of dollar-denominated bonds currently unveils attractive yields. 
The iShares J.P. Morgan USD Emerging Markets Bond ETF grants access to U.S. dollar-denominated bonds from emerging markets, presenting a yield exceeding 7.5% as of this article&#8217;s publication.
<ul>
<li>Average Yield to Maturity: 7.59% as of Aug. 17, 2023</li>
<li>Year-to-date Return: 2.34%</li>
<li>Expense Ratio: 0.39%</li>
</ul>
Read also: <a href="https://www.benzinga.com/money/how-to-buy-corporate-bonds">How to Buy Corporate Bonds</a>
Photo: Shutterstock

IGLB

LQDB

BondBloxx ETF Trust BondBloxx CCC-Rated USD High Yield Corporate Bond ETF

XCCC

The Magic 6%: These 5 Bond ETFs Now Offer Stock-Like Returns As Treasury Yields Jump To Multi-Decade Highs

The July jobs report issued Friday delivered mixed takeaways for the market, although it confirmed an overall <a href="https://www.benzinga.com/economics/macro-economic-events/23/08/33573419/julys-mixed-jobs-report-payrolls-miss-estimates-unemployment-rate-dips-wages-surp">healthy U.S. labor market.</a>
On one hand, the pace of nonfarm payrolls growth fell short of forecasts in July, with 187,000 jobs gained compared to the expected 200,000. On the other hand, the jobless rate fell to 3.5%, exceeding expectations of 3.6%. Wages increased at a monthly pace of 0.4% and an annual rate of 4.4%, which was faster than expected.
<h2 class="wp-block-heading">Biden, Fed Governor On July&#8217;s Jobs Report</h2>
The market interpreted the jobs report in a dovish manner, lowering expectations for potential interest rate hikes in September. Market-derived probabilities put the chance of a 25-basis-point hike in September at 13%, down from 19% before the report was issued Friday morning. 
President Joe Biden applauded the job market data, emphasizing that the share of working-age Americans with jobs has reached a 20-year high. He attributes this positive trend to the effects of his economic policies, often referred to as &#8220;Bidenomics.&#8221;
Atlanta Fed President Raphael Bostic said the Fed is likely to remain into restrictive territory well into 2024 and said he is unsurprised wages remain strong.
Five stocks from the Russell 1000 index (large-cap) and five exchange-traded funds had substantial price action in the opening minutes of trading Friday as a result of jobs data and the movement in interest rates, as well as statements regarding quarterly corporate results.
Read now: <a href="https://www.benzinga.com/23/08/33561045/lawmakers-press-biden-to-address-us-investment-risks-in-china-for-too-long-america-has-funded-the-ch">Lawmakers Press Biden To Address US Investment Risks In China: &#8216;For Too Long, America Has Funded The China Communist Party&#8217;s Military Buildup&#8217;</a>
<h2 class="wp-block-heading">5 Stocks Rallying On Friday</h2>
<ul>
<li>Atlassian Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TEAM#NASDAQ">TEAM</a>) surged by an impressive 19% as the company massively surpassed Street&#8217;s estimates in the last quarter, prompting Barclays to raise its price target from $165 to $195.</li>
<li>Natera Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NTRA#NYSE">NTRA</a>) soared 16% after delivering better-than-expected results in the second quarter. </li>
<li>Universal Display Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/OLED#NASDAQ">OLED</a>) rose 11% following its stronger-than-expected earnings and revenues, with both Needham and Deutsche Bank raising their price targets.</li>
<li>Cloudflare, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NET#NASDAQ">NET</a>) experienced a 10% rally after it reported stronger-than-anticipated earnings, leading Needham to increase the price target from $75 to $85. </li>
<li>Amazon Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>) gained nearly 10%, achieving its strongest daily performance since November 2022 due to a surprise EPS and revenue beat in the last quarter.</li>
</ul>
<h2 class="wp-block-heading">5 ETFs Rallying On Friday</h2>
<ul>
<li>The Consumer Discretionary Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLY#NYSE">XLY</a>) saw a notable 2.2% increase in stocks within the consumer discretionary sector, largely driven by a surge in the ETF&#8217;s heavyweight, Amazon.</li>
<li>VanEck Junior Gold Miners ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GDXJ#NYSE">GDXJ</a>) experienced a boost of 1.8% in response to rising gold prices that were fueled by a declining dollar.</li>
<li>iShares MSCI Mexico ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EWW#NYSE">EWW</a>) surged 1.7%, aided by a 1% increase in the value of the Mexican peso. </li>
<li>First Trust DJ Internet Index Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FDN#NYSE">FDN</a>) rose 1.2%, led by Amazon, Cloudflare and Atlassian. </li>
<li>iShares JP Morgan USD Emerging Market Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NYSE">EMB</a>) recorded an impressive 1% gain, marking its best daily performance of the week. A lower U.S. dollar and declining Treasury yields contributed to the strength of emerging market bonds.</li>
</ul>
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/08/33575375/atlassian-performs-despite-macro-headwinds-4-analysts-on-q4-print-outlook">Atlassian Performs Despite Macro Headwinds: 4 Analysts On Q4 Print, Outlook</a>
Photo via Shutterstock.

Equities

Sector ETFs

Broad U.S. Equity ETFs

AMZN

First Trust Dow Jones Internet Index Fund

GDXJ

NTRA

OLED

TEAM

Select Sector SPDR-Consumer Discretionary

Investors Cheer Jobs Report: Why Are These 5 Stocks And 5 ETFs Shining On Friday?

The U.S. dollar index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UUP#NYSE">UUP</a>), dropped below the key 100 mark on Thursday, plunging to its weakest levels since April 2022, as softer-than-expected consumer and producer inflation encouraged traders to scale back bets of more than one rate hike by the <a href="https://www.benzinga.com/economics/macro-economic-events/23/07/33214549/producer-inflation-falls-to-35-month-low-jobless-claims-rise-less-than-expected-b">Federal Reserve this year. </a>
Consumer price inflation fell to 3% year on year in June, the slowest rate since March 2021, a full percentage point lower than in May and well below the predicted 3.1%. In June, producer inflation fell to a negligible 0.1% year-on-year, the lowest reading since August 2020 and considerably below the predicted 0.4%.
The dollar came under pressure following a steep decline in U.S. Treasury yields, with the policy-sensitive two-year Note yield falling 20 basis points to 4.66% in the previous two sessions.
The value of the dollar, as gauged by the DXY index, has dropped 4% since the beginning of the year and 13% from its all-time high reached in September 2022. The dollar has suffered even greater losses versus emerging-market currencies, such as the Mexican peso (MXN) and the Chilean peso (CLP), which are up 20% and 18%, respectively, since their lows in 2022. 
<h2 class="wp-block-heading">Chart: US Dollar Index Falls To 15-Month Lows</h2>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="777" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/13114347/DXY_2023-07-13_17-43-05_155e8-1024x777.png" alt="" class="wp-image-67571" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/13114347/DXY_2023-07-13_17-43-05_155e8-1024x777.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/13114347/DXY_2023-07-13_17-43-05_155e8-300x228.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/13114347/DXY_2023-07-13_17-43-05_155e8-768x583.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/13114347/DXY_2023-07-13_17-43-05_155e8-1536x1166.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/13114347/DXY_2023-07-13_17-43-05_155e8.png 1628w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<h2 class="wp-block-heading">Dollar Weakens: What Are The Effects?</h2>
<ul>
<li>For U.S. exporters: Products made in the U.S. become more competitive on international markets when the dollar weakens. As a result, American exporters may see an increase in demand and sales, potentially improving their profits. </li>
<li>For multinational corporations: Multinational corporations headquartered in the U.S. typically get a sizable amount of their revenue from outside of the country. A weaker dollar can improve the value of these earnings when they are repatriated (converted back to U.S. currency). </li>
<li>For emerging markets: A weaker dollar might make it less expensive for emerging-market countries to repay or service their debt in U.S. dollars, which makes a high portion of their overall debt. It also encourages investors to seek higher returns in emerging markets, leading to increased capital inflows and potentially boosting these economies. </li>
<li>For inflation and purchasing power: It&#8217;s important to note that a weaker dollar can have also downsides, such as potential inflationary pressures and decreased purchasing power for U.S. consumers and companies importing foreign goods.</li>
</ul>
Read Now: <a href="https://www.benzinga.com/economics/macro-economic-events/23/07/33218471/rate-hike-speculation-cools-as-us-producer-inflation-softens-economist-predicts-s">Rate Hike Speculation Cools As US Producer Inflation Softens, Economist Predicts S&amp;P 500 To Reach 5,000 By Year End</a>
<h2 class="wp-block-heading">5 Stocks Stand To Gain From A Weaker U.S. Dollar</h2>
<ol>
<li>Procter &amp; Gamble Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PG#NYSE">PG</a>): Procter &amp; Gamble has a global network that includes operations and sales in over 180 countries. PG generates the majority of its revenue outside of North America. </li>
<li>McDonald&#8217;s Corp (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MCD#NYSE">MCD</a>): McDonald&#8217;s runs and franchises restaurants in more than 100 countries, with a sizable amount of its earnings coming from outside the U.S. </li>
<li>Caterpillar Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CAT#NYSE">CAT</a>): Caterpillar, a leading maker of construction and mining equipment, generates 53% of its revenues outside of North America. </li>
<li>Exxon Mobil Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>): Exxon is the largest oil company in U.S. Because oil is traded in U.S. dollars on international markets, a weakening dollar makes oil barrels more affordable to buyers. </li>
<li>Newmont Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NEM#NYSE">NEM</a>): Newmont is a major gold miner whose business is heavily reliant on precious metals performance. A weakening dollar makes gold more appealing, driving up the price of the metal.</li>
</ol>
<h2 class="wp-block-heading">5 ETFs Set To Rally From A Falling Dollar</h2>
<ul>
<li>Pacer US Export Leaders ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PEXL#NYSE">PEXL</a>): PEXL offers exposure to U.S. companies that rank within the top 10% in the country in terms of foreign sales, providing a unique focus on firms benefiting from a strong international presence. </li>
<li>IShares J.P. Morgan USD Emerging Market Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NYSE">EMB</a>): EMB offers exposure to U.S. dollar-denominated government bonds issued by emerging market countries, and tracks the J.P. Morgan EMBI Global Core Index. </li>
<li>VanEck Gold Miners ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GDX#NYSE">GDX</a>): GDX provides exposure to publicly traded companies worldwide involved primarily in gold mining. </li>
<li>Energy Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLE#NYSE">XLE</a>): This ETF offers exposure to companies in the oil, gas, consumable fuel, and energy equipment and services industries, providing a means to invest in energy beyond just oil. </li>
<li>Invesco CurrecyShares Euro Currency Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FXE#NYSE">FXE</a>): The fund seeks to track the performance of the euro, the official currency of 19 of the 27 member countries of the European Union.</li>
</ul>
Read Now: <a href="https://www.benzinga.com/markets/cryptocurrency/23/07/33217612/the-rally-is-broadening">The Rally Is Broadening</a>
Photo: Shutterstock

Large Cap

Eurozone

Currency ETFs

Forex

Market Vectors ETF Trust Market Vectors Gold Miners

PEXL

PowerShares DB US Dollar Index Bullish Fund

Cash In On The Crashing Dollar: 5 Stocks And ETFs Ready To Soar From The Greenback's Downfall

The debt limit talk&nbsp;has&nbsp;reached its&nbsp;last and most important stage&nbsp;with just five days, or barely more than 100 hours, until the U.S. Treasury may&nbsp;<a href="https://www.benzinga.com/topic/debt-ceiling" target="_blank">run&nbsp;out of money.&nbsp;</a>
Both the stock and the bond market&nbsp;are likely to react strongly depending whether a deal is reached or not, or if any other surprises arise at the end. Treasury yields could also see sharp swings on sensitive headlines in the coming hours.&nbsp;
Negotiators for the White House and the Republican Party&nbsp;are scrambling to avert a historic and probably catastrophic U.S. default, as Treasury Secretary Janet Yellen predicted &quot;early June&quot; as the date when the government&#39;s cash won&#39;t be able to meet all payments due.&nbsp;
Read Also:&nbsp;<a href="https://www.benzinga.com/government/23/05/32593845/congressional-debt-ceiling-talks-gain-momentum-critical-deal-in-sight-because-default-is-unacceptabl" target="_blank">Congressional Debt Ceiling Talks Gain Momentum, Critical Deal In Sight &#39;Because Default Is Unacceptable&#39;: Report</a>
The odds of an agreement being revealed late on Friday, May 26&nbsp;or on Saturday, May 27, with a House vote the following week are the highest, according to Goldman Sachs&nbsp;Chief Economist&nbsp;Jan Hatzius.&nbsp;
Goldman Sachs&#39; baseline forecasts see the U.S. Treasury reaching its minimal cash level on June 6, with funds totally depleted by June 9 if the debt limit is not raised.&nbsp;
Benzinga highlighted&nbsp;how these&nbsp;five bond ETFs could react&nbsp;to debt limit announcements in the coming hours.&nbsp;
1) IShares 0-3 Month Treasury Bond ETF (ARCA: SGOV)
The fund managed by Blackrock Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/blk#NYSE">BLK</a>) invests in Treasury bills with maturities up to three months. These are the shortest-dated U.S. Treasury securities which are particularly sensitive to the June deadline.&nbsp;
In the previous month, yields on one-month Treasury notes due after June have risen from 4% to 5.7%, indicating market worry regarding the debt limit resolution. Short-term T-bill rates will fall if the debt ceiling is lifted, raising the&nbsp;ETF&#39;s&nbsp;value.
2) IShares 1-3 Year Treasury Bond ETF (ARCA: SHY)
The IShares 1-3 Year Treasury Bond ETF is particularly sensitive to market Fed rate expectations, which are substantially reflected in two-year Treasury yield fluctuations.
Short-term Treasury rates may fluctuate whether the debt ceiling is raised or not. A compromise will keep the Fed focused on recent inflation and labor market data, <a href="https://www.benzinga.com/economics/macro-economic-events/23/05/32593305/feds-favorite-inflation-gauge-rises-more-than-expected-in-april-market-expectatio" target="_blank">which have been hotter than expected</a>, supporting market predictions for a June rate hike. ETFs will decrease if short-term rates rise, but yield-seeking investors may find an attractive entry point here&nbsp;if they think the Fed will soon end its tightening cycle.
Since a U.S. default would cause market disruptions and employment losses, the Fed would likely opt to stop raising interest rates in a no-deal situation.&nbsp;In this case,&nbsp;the value of the&nbsp;IShares 1-3 Year Treasury Bond ETF&nbsp;will rise.&nbsp;
3) IShares 20+ Year Treasury Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>)
The IShares 1-3 Year Treasury Bond ETF is sensitive to long-term Treasury yield changes, which are heavily influenced by growth and inflation forecasts.
A deal is likely to increase in duration-exposed&nbsp;Treasury yields, to varying degrees depending on the amount of the expenditure reductions. Lower-than-expected budget cutbacks&nbsp;will provide a stronger push&nbsp;to yields&nbsp;than a debt limit agreement indicating substantial expenditure cuts.
4)&nbsp;iShares iBoxx $ High Yield Corporate Bond ETF (ARCA: HYG)
HYG invests in high-yield corporate bonds denominated in U.S. dollars, which are by definition a risky asset that is closely tied to market sentiment.
If the debt limit resolution is seen positively by the market, high-yield corporates will profit from the wider risk-on atmosphere&nbsp;and the ETF&#39;s value is projected to rise.
A no-deal scenario or an agreement with significant budget cutbacks, on the other hand, may cause weakness in high-yield corporates, prompting investors to flee&nbsp;riskier assets and flock to&nbsp;safer alternatives.
5)&nbsp;iShares J.P. Morgan USD Emerging Market (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/emb#NASDAQ">EMB</a>)
The fund invests in developing market dollar-denominated fixed-income instruments and may experience significant volatility depending on whether or not an agreement on the debt limit is reached.&nbsp;
Given that developing market bonds are a risky asset class, they tend to be linked to U.S. high-yield corporate bonds, so EMB could experience a similar impact&nbsp;as HYG. A broader risk-off mood could spark losses in EM bonds, while this market is likely to benefit&nbsp;from an increasing risk appetite.&nbsp;
Chart: Performance of SHY, TLT, EMB and HYG Year-To-Date
<img alt="" src="https://www.benzinga.com/files/u1363475/hyg_2023-05-26_14-47-01_5fc15.png" style="height:500px; width:100%" />
<ul>
</ul>
Photo: Shutterstock

Government

SGOV

iShares Trust Barclays 1-3 Year Treasury Bond Fund

5 Bond ETFs To Watch As Debt Ceiling Talks Enter The Final Hours To Avoid A US Default

Both the stock market and the bond market will be significantly affected by the upcoming <a href="https://www.benzinga.com/general/education/22/04/25718901/what-is-the-fomc" target="_blank">Federal Reserve&#39;s interest rate decision.&nbsp;</a>
The market is now nearly fully pricing in a 25-basis-point raise to 5%-5.25%, according to the CME Group Fedwatch tool, but what the Fed hints to do&nbsp;beyond May is what keeps investors on alert.&nbsp;
The market&#39;s attention will mostly be directed at determining if this is the Federal Reserve&#39;s last&nbsp;rate hike in the current cycle,&nbsp;or whether Fed Chair Jerome Powell will leave the door open for an additional increase in June.&nbsp; 
The second hypothesis would cause heavy&nbsp;market fluctuations, since this scenario is not&nbsp;discounted by&nbsp;investors, who expect the Fed to conclude its rate increases in May.&nbsp;
How U.S. Treasuries Could React To The Fed&#39;s Meeting
The yield on the two-year Treasury note is currently at 4%, while that on the 10-year benchmark is at 3.46% as the May FOMC meeting approaches.
If the Fed suggests that rate hikes have ended and adopts a rather gloomy perspective on the economy&nbsp;and the labor market, U.S. Treasury yields are projected to fall further, driving up the price of U.S. government bonds.
A hawkish Fed, with Chair Powell rejecting current market expectations of a pause in June and the start of rate cuts later this year, would likely be detrimental to the Treasury market, as rates would rise to reflect the Fed&#39;s higher-for-longer attitude on interest rates.
5 Bond ETFs to Keep an Eye On Ahead of the May FOMC Meeting
&bull; iShares 1-3 Year Treasury Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/shy#NASDAQ">SHY</a>)
The iShares 1-3 Year Treasury Bond ETF&nbsp;is an exchange-traded fund managed by BlackRock, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/blk#NYSE">BLK</a>) that invests in U.S. Treasury securities with maturities higher than or equal to one year but less than three years.
As a result, SHY is sensitive to short-term Fed interest rate speculation, although its volatility is normally limited due to its short duration.
When an unexpected negative shock strikes the market and leads the Fed to become more dovish, it is one of the assets that tend to increase because investors regard it as a safe haven.
SHY has risen 1% thus far in 2023&nbsp;and has recorded outflows&nbsp;of $352 million over the last&nbsp;month.
&bull;&nbsp;iShares 20+ Year Treasury Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>)
The iShares 20+ Year Treasury Bond ETF&nbsp;is an exchange-traded fund managed by BlackRock that invests in U.S. Treasury securities with maturities higher than 20 years.
As a result of its high&nbsp;duration, TLT is very sensitive to medium-term Fed interest rate expectations and often shows heightened volatility to interest-rate shifts.
When recessionary shocks hit the economy and induce a decrease in inflation expectations, this asset appreciates significantly.
TLT has risen 4.1% year to date and has attracted inflows of $1.8&nbsp;billion over the last month.&nbsp;
Read next: <a href="https://www.benzinga.com/money/how-to-buy-treasury-bonds" target="_blank">How to Buy Treasury Bonds</a>
&bull;&nbsp;iShares iBoxx $ Investment Grade Corporate ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqd#NYSE">LQD</a>)
The iShares iBoxx $ Investment Grade Corporate Bond ETF&nbsp;is an exchange-traded fund managed by BlackRock that invests in investment-grade corporate bonds with at least three&nbsp;years to maturity.
Investors sometimes flee to the fixed rates of safer corporate bonds during moments of risk-off in the stock markets
LQD has risen 2.7% year to date and has attracted outflows of $720 million over the last month.&nbsp;
&bull;&nbsp;iShares iBoxx $ High Yield Corporate Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>)
The iShares iBoxx $ High Yield Corporate Bond ETF&nbsp;is an exchange-traded fund managed by BlackRock that invests in high-yield corporate bonds with maturities of at least one year and less than 15 years.
Due to its exposure to junk corporate bonds, HYG is a more volatile investment that tends to follow&nbsp;the sentiment on&nbsp;global stock markets.
Periods of abundant liquidity and limited&nbsp;corporate defaults are a&nbsp;perfect environment&nbsp;for HYG to grow, yet&nbsp;when interest rates rise and there is anxiety about widespread defaults in the corporate sector, HYG declines.
HYG is up 1.1% year to date and attracted inflows of&nbsp;$2.07 billion over the last month.
&bull;&nbsp;iShares J.P. Morgan USD Emerging Market (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/emb#NASDAQ">EMB</a>)
The iShares J.P. Morgan USD Emerging Markets Bond ETF is an exchange-traded fund managed by BlackRock International Limited and BlackRock Fund Advisors that invests in USD-denominated bonds of emerging countries across the globe&nbsp;and seeks to replicate the performance of J.P. Morgan EMBI Global Core Index.
EMB is also a highly volatile bond ETF that is also tightly correlated to HYG given its &quot;risk-on&quot; profile.&nbsp;Therefore, lower Fed interest rates and prospects of abundant liquidity in markets are what send&nbsp;EMB higher. On the other hand, higher U.S. Interest rates and rising Treasury yields represent major headwinds.
EMB has gained 0.4% year to date and has registered outflows of $215 million over the last month.
Now Read:&nbsp;<a href="https://www.benzinga.com/economics/macro-economic-events/23/05/32165610/investors-reduce-2023s-rate-cut-bets-ahead-of-fomc-analysts-now-expect-fed-on-haw">Investors Reduce 2023 Rate Cut Bets Ahead Of FOMC: Analysts Now Expect Fed On Hawkish-Hold Mode For Longer</a>
Some elements of this story were previously reported by Benzinga and it has been updated.

As Key Fed Interest Rate Decision Approaches: Here Are 5 Bond ETFs To Keep An Eye On

<ul>
<li>On Wednesday, the Federal Reserve is expected to raise interest rates by half of a percentage point and announce the start of reductions to its $9 trillion balance sheet as U.S. central bankers work to combat high inflation.</li>
<li>The decision would lift the Fed&#39;s short-term target policy rate to 0.75% - 1% and set a plan to trim its Treasuries and mortgage-backed securities portfolio by as much as&nbsp;$95 billion a month,&nbsp;<a class="editor-rtfLink" href="https://www.reuters.com/business/finance/feds-racing-raise-rates-how-high-remains-an-open-bid-2022-04-28/" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">writes Reuters</a>.</li>
<li>Markets have priced in further rate increases through this year and into next.</li>
<li>&quot;Powell will continue to have a strong incentive to sound hawkish,&quot; Piper Sandler economist Roberto Perli said this week. &quot;The Fed&#39;s focus these days is 100% on bringing inflation down, and hawkish expectations help that cause.&quot;</li>
<li>In the run-up to this week&#39;s meeting, Powell has said he wants to get rates &quot;expeditiously&quot; to what Fed policymakers regard as a &quot;neutral&quot; range of 2.25%-2.5%, and then higher if needed.</li>
<li>Photo via Wikimedia Commons</li>
</ul>

ProShares UltraShort Lehman 20+ Year Treasury

Fed Expected To Hike Interest Rate By Half Percentage Point To Curb Inflation

<ul>
<li>Japanese institutional managers are fueling the bond selloff just as the Federal Reserve pares its $9 trillion balance sheet,&nbsp;<a class="editor-rtfLink" href="https://www.bloomberg.com/news/articles/2022-05-01/biggest-treasury-buyer-outside-u-s-quietly-offloads-billions?sref=TBDibEcD" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">writes Bloomberg</a>.</li>
<li>The latest data from BMO Capital Markets show that the largest overseas holder of Treasuries has offloaded almost $60 billion over the past three months.&nbsp;</li>
<li>Bloomberg says that though it may be a small change relative to Japan&#39;s $1.3 trillion stockpile, the divestment threatens to grow.&nbsp;</li>
<li>The monetary path between the U.S. and Japan is diverging evermore, the yen is at 20-year lows, and market volatility stateside is breaking out.&nbsp;</li>
<li>&quot;It&#39;s a significant amount of selling and on par with what we saw in early 2017 from Japan,&quot; said Ben Jeffery, BMO&#39;s rates strategist.&nbsp;</li>
<li>While an aggressive Fed tightening cycle to control inflation could result in multiple 50 basis-point hikes in the coming months, the Bank of Japan remains locked in the endless stimulus.&nbsp;</li>
<li>While the selloff pushed the 10-year U.S. yield to 2.94% on Monday in Asia, buyers who pay to protect against fluctuations in the yen-dollar exchange rate see their effective yields dwindle to just 1.3%.&nbsp;</li>
<li>Hedging costs have risen to 1.55 percentage points.</li>
<li>&quot;Hedge costs are the issue for investing in U.S. Treasuries,&quot; said Eiichiro Miura, the fixed-income department general manager at Nissay Asset Management Corp.</li>
</ul>

Japanese Investors Fuel US Bond Selloff, Find Good Debt Opportunities In Europe: Bloomberg

According to a new report, global sovereign debt is expected to climb to a whopping $71.6 trillion in 2022, while fresh borrowing is also anticipated to remain high,&nbsp;<a class="editor-rtfLink" href="https://www.cnbc.com/2022/04/06/global-government-debt-set-to-soar-to-record-71-trillion-this-year-research.html" style="color:#4a6ee0; background:transparent; margin-top:0pt; margin-bottom:0pt" target="_blank">writes CNBC</a>.
In its second annual Sovereign Debt Index, British asset manager Janus Henderson projected a 9.5% rise in global government debt, driven primarily by the U.S., Japan, and China.
According to the report, global government debt jumped 7.8% in 2021 to $65.4 trillion, while debt servicing costs dropped to $1.01 trillion, an effective interest rate of just 1.6%. However, debt servicing costs are set to rise significantly in 2022, climbing around 14.5% on a constant-currency basis to $1.16 trillion.
&ldquo;The pandemic has had a huge impact on government borrowing &ndash; and the after-effects are set to continue for some time yet. The tragedy unfolding in Ukraine is also likely to pressure Western governments to borrow more to fund increased defense spending,&rdquo; said Bethany Payne, portfolio manager for global bonds at Janus Henderson.
According to the latest global borrowing report from S&amp;P Global Ratings, new sovereign borrowing is expected to reach $10.4 trillion in 2022, almost a third above the average before the Covid-19 pandemic.
&ldquo;We expect borrowing to stay elevated, owing to high debt-rollover needs, fiscal policy normalization challenges posed by the pandemic, high inflation, and polarized social and political landscapes,&rdquo; said S&amp;P Global Ratings credit analyst Karen Vartapetov.

Global Government Debt Expected To Swell To $71 Trillion In 2022: CNBC

Shares of iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>) saw some unusual options activity on Wednesday. Following the unusual option alert, the stock price moved up to $111.64. 
<ul>
<li>Sentiment: BEARISH</li>
<li>Option Type: SWEEP</li>
<li>Trade Type: PUT</li>
<li>Expiration Date: 2021-12-17</li>
<li>Strike Price: $112.00</li>
<li>Volume: 890</li>
<li>Open Interest: 22</li>
</ul>
<h2>Three Signs Of Unusual Options Activity</h2>
Extraordinarily large volume (compared to historical averages) is one indication of unusual options market activity. Volume refers to the total number of contracts traded over a given time period when discussing options market activity. Open interest is the number of unsettled contracts that have been traded but not yet closed by either counterparty. In other words, open interest represents the quantity of contracts that individual parties have written but not yet found a counterparty for (i.e. a buyer finding a seller, or a seller finding a buyer).
Another sign of unusual activity is the trading of a contract with an expiration date in the distant future. Usually, additional time until a contract expires allows more opportunity for it to reach its strike price and grow its time value. Time value is important to consider because it represents the difference between the strike price and the value of the underlying asset. 
Contracts that are "out of the money" are also indicative of unusual options activity. "Out of the money" contracts occur when the underlying price is under the strike price on a call option, or above the strike price on a put option. These trades are made with the expectation that the value of the underlying asset is going to change dramatically in the future, and buyers and sellers will benefit from a greater profit margin. 
<h2>Bullish And Bearish Sentiments</h2>
Options are "bullish" when a call is purchased at/near ask price or a put is sold at/near bid price. Options are "bearish" when a call is sold at/near bid price or a put is bought at/near ask price. 
Although the activity is suggestive of these strategies, these observations are made without knowing the investor's true intentions when purchasing these options contracts. An observer cannot be sure if the bettor is playing the contract outright or if they're hedging a large underlying position in a common stock. For the latter case, the exposure a large investor has on their short position in common stock may be more meaningful than bullish options activity. 
<h2>Using These Options Strategies</h2>
Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.
For more information to understand options alerts, visit <a href="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts" title="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts">https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts</a>

Analyzing iShares J.P. Morgan USD Emerging Markets Bond ETF's Unusual Options Activity

On Wednesday, shares of iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>) saw unusual options activity. After the option alert, the stock price moved down to $112.45. 
<ul>
<li>Sentiment: BEARISH</li>
<li>Option Type: TRADE</li>
<li>Trade Type: PUT</li>
<li>Expiration Date: 2021-08-27</li>
<li>Strike Price: $108.00</li>
<li>Volume: 5000</li>
<li>Open Interest: 11029</li>
</ul>
<h2>Three Signs Of Unusual Options Activity</h2>
One way options market activity can be considered unusual is when volume is exceptionally higher than its historical average. The volume of options activity refers to the number of contracts traded over a given time period. The number of unsettled contracts that have been traded, but not yet closed, is called open interest. These contracts are not yet closed because a buyer has not purchased the contract, or a seller has not sold it.
Another indicator of unusual options activity is the trading of a contract with an expiration date in the distant future. Additional time until a contract expires generally increases the potential for it to grow its time value and reach its strike price. It is important to consider time value because it represents the difference between the strike price and the value of the underlying asset. 
Contracts that are "out of the money" are also indicative of unusual options activity. "Out of the money" contracts occur when the underlying price is under the strike price on a call option, or above the strike price on a put option. These trades are made with the expectation that the value of the underlying asset is going to change dramatically in the future, and buyers and sellers will benefit from a greater profit margin. 
<h2>Understanding Sentiment</h2>
Options are "bullish" when a call is purchased at/near ask price or a put is sold at/near bid price. Options are "bearish" when a call is sold at/near bid price or a put is bought at/near ask price. 
Although the activity is suggestive of these strategies, these observations are made without knowing the investor's true intentions when purchasing these options contracts. An observer cannot be sure if the bettor is playing the contract outright or if they're hedging a large underlying position in a common stock. For the latter case, the exposure a large investor has on their short position in common stock may be more meaningful than bullish options activity. 
<h2>Using These Strategies To Trade Options</h2>
Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.
For more information to understand options alerts, visit <a href="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts" title="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts">https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts</a>

Understanding iShares J.P. Morgan USD Emerging Markets Bond ETF's Unusual Options Activity

iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>) shares experienced unusual options activity on Friday. The stock price moved up to $112.72 following the option alert. 
<ul>
<li>Sentiment: BEARISH</li>
<li>Option Type: SWEEP</li>
<li>Trade Type: PUT</li>
<li>Expiration Date: 2021-08-20</li>
<li>Strike Price: $112.00</li>
<li>Volume: 1051</li>
<li>Open Interest: 1418</li>
</ul>
<h2>Three Signs Of Unusual Options Activity</h2>
One way options market activity can be considered unusual is when volume is exceptionally higher than its historical average. The volume of options activity refers to the number of contracts traded over a given time period. The number of contracts that have been traded, but not yet closed by either counterparty, is called open interest. A contract cannot be considered closed until there exists both a buyer and seller for it. 
Another sign of unusual activity is the trading of a contract with an expiration date in the distant future. Usually, additional time until a contract expires allows more opportunity for it to reach its strike price and grow its time value. Time value is important to consider because it represents the difference between the strike price and the value of the underlying asset. 
"Out of the money" contracts are unusual because they are purchased with a strike price far from the underlying asset price. "Out of the money" occurs when the underlying price is under the strike price on a call option, or above the strike price on a put option. Buyers and sellers try to take advantage of a large profit margin in these instances because they are expecting the value of the underlying asset to change dramatically in the future. 
<h2>Bullish And Bearish Sentiments</h2>
Options are "bullish" when a call is purchased at/near ask price or a put is sold at/near bid price. Options are "bearish" when a call is sold at/near bid price or a put is bought at/near ask price. 
These observations are made without knowing the investor's true intent by purchasing these options contracts. The activity is suggestive of these strategies, but an observer cannot be sure if a bettor is playing the contract outright or if the options bettor is hedging a large underlying position in common stock. For the latter case, bullish options activity may be less meaningful than the exposure a large investor has on their short position in common stock.
<h2>Trading Options With These Strategies</h2>
Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.
For more information to understand options alerts, visit <a href="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts" title="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts">https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts</a>

iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/EMB#NASDAQ">EMB</a>) shares experienced unusual options activity on Monday. The stock price moved down to $112.5 following the option alert. 
<ul>
<li>Sentiment: BEARISH</li>
<li>Option Type: SWEEP</li>
<li>Trade Type: PUT</li>
<li>Expiration Date: 2021-12-17</li>
<li>Strike Price: $107.00</li>
<li>Volume: 1097</li>
<li>Open Interest: 941</li>
</ul>
<h2>Three Indications Of Unusual Options Activity</h2>
Exceptionally large volume (compared to historical averages) is one reason for which options market activity can be considered unusual. The volume of options activity refers to the number of contracts traded over a given time period. The number of contracts that have been traded, but not yet closed by either counterparty, is called open interest. A contract cannot be considered closed until there exists both a buyer and seller for it. 
Another sign of unusual activity is the trading of a contract with an expiration date in the distant future. Usually, additional time until a contract expires allows more opportunity for it to reach its strike price and grow its time value. Time value is important to consider because it represents the difference between the strike price and the value of the underlying asset. 
Contracts that are "out of the money" are also indicative of unusual options activity. "Out of the money" contracts occur when the underlying price is under the strike price on a call option, or above the strike price on a put option. These trades are made with the expectation that the value of the underlying asset is going to change dramatically in the future, and buyers and sellers will benefit from a greater profit margin. 
<h2>Bullish And Bearish Sentiments</h2>
Options are "bullish" when a call is purchased at/near ask price or a put is sold at/near bid price. Options are "bearish" when a call is sold at/near bid price or a put is bought at/near ask price. 
These observations are made without knowing the investor's true intent by purchasing these options contracts. The activity is suggestive of these strategies, but an observer cannot be sure if a bettor is playing the contract outright or if the options bettor is hedging a large underlying position in common stock. For the latter case, bullish options activity may be less meaningful than the exposure a large investor has on their short position in common stock.
<h2>Trading Options With These Strategies</h2>
Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.
For more information to understand options alerts, visit <a href="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts" title="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts">https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts</a>

Options

World&#39;s largest asset manager and global wealth management firm BlackRock, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/blk#NYSE">BLK</a>) is bullish on China&#39;s domestic bond market.
In the <a href="http://www.cnbc.com/2020/10/15/blackrock-is-bullish-on-chinas-onshore-bond-market.html">interview</a> on CNBC&#39;s Street Signs Asia, BlackRock Head of Asian Credit Neeraj Seth said, &quot;We still see China bond market to be fairly attractive.&quot;
Bullish Bond Thesis: The strong credit data, weak inflation, and liquidity injection from the People&#39;s Bank of China make the bonds attractive.
The real and nominal yields with the potential direction of monetary policy support returns in fixed income.
&quot;You have high nominal yield, potential to generate returns in an environment where rates are pretty low globally and a portfolio diversification,&quot; Seth told CNBC.
China is the second-largest bond market worth $16 trillion. Foreign investor participation in Chinese onshore bonds accounts for just over 2%. As the process of inclusion of Chinese bonds in major global indexes is underway, foreign participation will increase.
With low to no correlation to global markets, China&#39;s domestic bonds offer decent returns in an environment where rates are low globally.
Seth commented on the liquidity risk factors with regards to recent China&#39;s property developer <a href="https://www.cnbc.com/2020/10/07/chinese-property-developers-rising-debt-and-junk-bonds.html">Evergrand&#39;s bond debacle</a> by mentioning that the market is large and it offers a wide array of bonds issued by the government, state-owned enterprises, and private companies.
Investors can build a portfolio that is both resilient and diversified.
BlackRock, <a href="https://www.blackrock.com/sg/en/investment-ideas/china-bond-fund">on its website</a>, mentions that China&#39;s low co-relation to global risk assets is &quot;especially important during times of extreme market volatility&quot; offering up to an 18% annualized growth rate.
Related ETFs: iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/emb#NASDAQ">EMB</a>), Invesco Emerging Markets Sovereign Debt Portfolio ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pcy#NYSE">PCY</a>), VanEck Vectors J.P. Morgan EM Local Currency Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/emlc#NYSE">EMLC</a>), VanEck Vectors ChinaAMC China Bond ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cbon#NYSE">CBON</a>) and KraneShares E Fund China Commercial Paper ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/kcny#NYSE">KCNY</a>)
&nbsp;

Media

CBON

Market Vectors Emerging Markets Local Currency Bond ETF

EMLC

KCNY

PowerShares Emerging Markets Sovereign  Portfolio

BlackRock Sees China Bond Market As 'Fairly Attractive'

Geopolitical volatility is always a consideration when investing in emerging markets, whether the underlying asset is bonds or equities. Latin America is reminding investors of that fact this year and political upheaval in the region could weigh on a popular fixed income exchange traded fund.
<h3>What To Know About Latin American Political Volatility</h3>
The iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/emb#NASDAQ">EMB</a>), the world&#39;s largest emerging market bond fund, <a href="https://www.benzinga.com/trading-ideas/long-ideas/19/11/14708595/an-emerging-markets-trip-for-better-bond-yields">is up nearly 8% year to date</a> and seduces investors with a yield of 5.44%, or almost triple what they get with 10-year Treasuries.
Of course, that yield is part of the compensation for investors get for taking on more risk with emerging markets sovereign debt than they would find with equivalent developed market bonds. That risk is currently rearing its heard.
&ldquo;Recent political volatility in a number of Latin American countries, including Argentina, Bolivia, Chile, Ecuador and Peru, reflects a broader theme of rising political risk that could amplify negative sovereign credit trends in the regions,&rdquo; <a href="https://www.fitchratings.com/site/pr/10102118">Fitch Ratings said in a recent note</a>.
<h3>Why It&#39;s Important For EMB</h3>
Even when throwing out Bolivia because that country isn&#39;t represented in EMB, Latin America&#39;s recent bout of political volatility is concerning for the fund. Argentina, Chile, Ecuador and Peru combine for over 8% of the fund&#39;s weight.
Until recently, Chile was something of a geopolitical light in Latin America, home to a mostly open and transparent government and economy and one of the least politically volatile nations in the region. That has changed.
&ldquo;The spate of heightened political volatility in Latin America has included sustained, large-scale demonstrations in Bolivia, Chile and Ecuador that have disrupted economic activity and prompted policy shifts, a constitutional crisis in Peru, and a significant electoral shock that precipitated a financial crisis and sovereign default in Argentina,&rdquo; according to Fitch.
<h3>What&#39;s Next Following Protest</h3>
With Chile&#39;s less volatile status tarnished, that honor should have shifted to Colombia, but on Thursday, citizens in South America&#39;s third-largest economy took to the streets, initiating not a revolt, but a referendum on President Ivan Duque, saying far too many have been left behind throw years of mostly solid economic growth there.
Colombian bonds represent 3.31% of EMB&#39;s weight. Don&#39;t forget that there were recently protests in Uruguay, 2.46% of EMB&#39;s geographic exposure.
Investors considering EMB have to hope Brazil and Mexico, Latin America&#39;s two largest economies, prove protest proof because those countries combine for 9% of the fund&#39;s roster. Overall, Latin America accounts for about 29% of EMB&#39;s geographic weight.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/11/14854504/preferred-etfs-get-preferential-treatment-as-rates-swoon">A Pertinent Preferred Stock ETF</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/11/14854643/this-dividend-etf-is-having-its-day">A Fine Moment For This Dividend ETF</a>

Short Ideas

Trading Ideas

Regional Political Risk Could Be An Issue For This Emerging Market Bond ETF

The Federal Reserve is lifting the spirits of fixed-income investors and propelling a record amount of cash into bond exchange traded funds this year, but with collapsing U.S. government yields, bond investors are yearning for more &mdash; more yield, that is.
<h3>What Happened</h3>
With 10-year Treasury yields laboring around 1.69% at Thursday&#39;s close, emerging market bonds look highly tempting.
For instance, the iShares J.P. Morgan USD Emerging Markets Bond ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/emb#NASDAQ">EMB</a>) sports a <a href="https://www.ishares.com/us/products/239572/?referrer=tickerSearch">30-day SEC yield of 4.38%</a> and has returned a tidy 13.15% this year.
EMB, the world&#39;s largest emerging markets bond fund, targets the J.P. Morgan EMBI Global Core Index, a collection of nearly 500 dollar-denominated sovereign bonds issued by developing world governments.
<h3>Why It&#39;s Important</h3>
While EMB has certainly compensated investors for the added risk associated with emerging markets bonds relative to Treasuries, both in terms of capital appreciation and yield, some market observers believe the rally in developing world debt can keep going.
&ldquo;We see factors further supporting EM debt from here: a likely Federal Reserve rate cut this week and the potential for a stable U.S. dollar; an EM growth rebound; and a temporary U.S.-China trade truce,&rdquo; <a href="https://www.blackrockblog.com/2019/10/30/is-the-em-debt-rally-for-real/">BlackRock said in a recent note</a>.
&ldquo;We favor selected EM debt for its income potential.&rdquo;
EMB has an effective duration of 7.88 years, putting it in intermediate-term territory. Investors do take on some credit risk with this fund compared to an equivalent developed market fund, as 42% of EMB&#39;s holdings are rated BB, B or CCC.
To be fair, the highly speculative CCC category represents just 3.3% of the fund&#39;s roster.
&ldquo;So far this year, both hard currency EM bonds &mdash;&nbsp;those mainly denominated in U.S. dollars &mdash;&nbsp;and their counterparts denominated in local EM currencies (so-called local currency bonds) have delivered strong returns,&rdquo; according to BlackRock.
<h3>What&#39;s Next</h3>
While the Fed usually commands the bulk of the world&#39;s rate cut-related headlines, plenty of emerging markets central banks are joining the party, and that could be another assist for EMB.
&ldquo;We also see space for further central bank rate cuts in a number of EM countries, including in Indonesia, India, Brazil and Mexico, not least because EM inflation pressures appear to be skewed to the downside,&rdquo; said BlackRock.
Mexico, Indonesia and Brazil combine for about 14% of EMB&#39;s weight.
Related Links:
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/19/10/14698130/3-etfs-to-consider-for-the-next-6-months">These Sector ETFs Should Be Good For A Few Months</a>
<a href="https://www.benzinga.com/trading-ideas/long-ideas/19/10/14698238/bulls-bank-on-brazil-again">Investors Love Brazil Again</a>

Long Ideas

An Emerging Markets Trip For Better Bond Yields

ETF short interest can shed light for traders on areas of the market where investors see potential weakness.
S3 Partners analyst Ihor Dusaniwsky&nbsp;released his latest list of ETFs with the most short interest on Wednesday.&nbsp;Total short interest in the 2,200 domestic ETFs that S3 tracks was up $4.77 billion to $159 billion last week, Dusaniwsky said.&nbsp;
&ldquo;ETF short sellers continue to make fixed income ETF&rsquo;s a popular short for both hedging and outright trading purposes, as five out of the top 20 ETF shorts are fixed-income ETFs,&rdquo; he said.
<h3>Most Shorted ETFs</h3>
The following are the 16 ETFs with the highest short interest, according to S3:
<ul>
<li>SPDR S&amp;P 500 ETF Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/spy#NYSE">SPY</a>), $42.12 billion.</li>
<li>iShares Russell 2000 Index (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwm#NYSE">IWM</a>), $11.37 billion.</li>
<li>PowerShares QQQ Trust, Series 1 (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qqq#NASDAQ">QQQ</a>), $9.51 billion.</li>
<li>iShares MSCI Emerging Markets Indx (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/eem#NYSE">EEM</a>), $5.54 billion.</li>
<li>iShares iBoxx $ High Yid Corp Bond (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/hyg#NYSE">HYG</a>), $5.16 billion.</li>
<li>iShares IBoxx $ Invest Grade Corp Bd Fd (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/lqd#NYSE">LQD</a>), $3.6&nbsp;billion.</li>
<li>Utilities SPDR (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlu#NYSE">XLU</a>), $3.28 billion.</li>
<li>SPDR S&amp;P Biotech (NYSEARCA: XBI), $3.27 billion.</li>
<li>iShares Barclays Aggregate Bond Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/agg#NYSE">AGG</a>), $3.08 billion.</li>
<li>iShares Barclays 20+ Yr Treas.Bond (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tlt#NASDAQ">TLT</a>), $3.03 billion.</li>
<li>iShares MSCI EAFE Index Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/efa#NYSE">EFA</a>), $2.91 billion.</li>
<li>Financial Select Sector SPDR Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xlf#NYSE">XLF</a>), $2.51 billion.</li>
<li>Industrial Select Sector SPDR Fund (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/xli#NYSE">XLI</a>), $2.48 billion.</li>
<li>ISHARES TR/JPMORGAN USD EMERGI (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/emb#NASDAQ">EMB</a>), $2.46 billion.</li>
<li>SPDR Gold Trust (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/gld#NYSE">GLD</a>), $2.17 billion.</li>
<li>SPDR Dow Jones Industrial Average ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/dia#NYSE">DIA</a>), $2.07 billion.</li>
</ul>
<h3>Benzinga&rsquo;s Take</h3>
It shouldn&rsquo;t be worrying that the SPY ETF is the largest short position by far. It doesn&rsquo;t necessarily mean investors are bearish about the market given that shorting the SPY ETF is one of the most popular ways for investors to hedge against their long stock positions.
Do you agree with this take? Email&nbsp;<a href="mailto:feedback@benzinga.com">feedback@benzinga.com</a>&nbsp;with your thoughts.
Related Links:
<a href="https://www.benzinga.com/top-stories/19/09/14481041/14-lowest-peg-ratios-in-the-s-p-500">14 Lowest PEG Ratios In The S&amp;P 500</a> 
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/19/09/14473044/10-stocks-where-short-sellers-are-throwing-in-the-towel">10 Stocks Where Short Sellers Are Throwing In The Towel</a>

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Election out of the way. Fed out of the way. Q3 earnings season is mostly over. Not many catalysts for a while. And that's just the way I like it. Markets need to calm down and digest. Investors' emotions need to recover. It's been a whirlwind.

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