What's Driving ETFs?

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Includes: CYB, ISHG, VCR
by: Tom Lydon

Greece was oh-so-close to a rescue, but the whole plan has come into question this week, keeping the markets and exchange traded funds flat. This morning, Greece is still a concern, but good news has been enough to outweigh the worries.

Greece took another hit this morning after seeing its debt downgraded to just one notch above junk status. The world’s concerns about Greece’s ability to pay its obligations have sent yields soaring. Will that be enough to lure investors to buy some debt at an auction next Tuesday? iShares S&P/Citi 1-3 Year International Treasury Bond (NASDAQ:ISHG) is up 0.25% so far this morning; Greece bonds are 4.6% of the fund. [Who's Driving the Bond ETF Market? You'd Be Surprised.]

Wholesalers saw their 11th consecutive monthly gain more than expected in February, up 0.6%. Auto and petroleum sales led the charge. There are also signs that businesses are restocking their empty shelves; inventories increased to $393.5 billion. This, coupled with reported sightings of consumers in chain stores, could bode well for retail ETFs. Vanguard Consumer Discretionary (NYSEARCA:VCR) is up 0.6% this morning. [ETF Strategies for the Retail Rebound.]

China has capitulated to Treasury Secretary Timothy Geithner’s gentle nudge, in which he encouraged the country to allow its currency to float freely. Well, sort of. A government economist said China could possibly resume yuan appreciation by... October. Or maybe in June. The issue isn’t over yet, and it has analysts, economists and government officials locked in debate, so it’s a matter to keep an eye on. The country may also raise interest rates as soon as this month. WisdomTree Dreyfus Chinese Yuan (NYSEARCA:CYB) is flat this morning. [ETFs to Watch as the Yuan Battle Heats Up.]