Higher inflation data has this interest rate sensitive ETF rising

Sep. 13, 2022 9:46 AM ETSimplify Interest Rate Hedge ETF (PFIX), SPYQQQ, DIA, IVV, VOOBy: Jason Capul, SA News Editor2 Comments

Growth of food sales or growth of market basket or consumer price index concept. Shopping basket with foods with coin stacks on yellow background.

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Following a hotter than anticipated Consumer Price Index report, the Simplify Interest Rate Hedge ETF (NYSEARCA:PFIX), which is geared to hedge against higher interest rates has seen an upward push.

PFIX has tracked into the green by 1.2%, and has outshined the broader markets with the Nasdaq, S&P 500, and Dow Jones based ETFs sinking in response to the latest inflation figures.

The Invesco QQQ ETF (QQQ), SPDR S&P 500 ETF Trust (NYSEARCA:SPY), iShares Core S&P 500 ETF (IVV), Vanguard S&P 500 ETF (VOO), and the SPDR Dow Jones Industrial Average ETF (DIA) are all down 3%, 2.2%, 2.2%, 2.2%, and 1.8%, respectively.

PFIX has drawn some attention as rising rates continue to be the theme looking forward. The ETF seeks to hedge against interest rate movements by holding a large position in over-the-counter interest rate options that are intended to offer exposure to large upward moves in interest rates and interest rate volatility.

The latest CPI print has increased the idea of a full 1% rate hike by the Fed next week. Fed Fund Futures are now pricing in a 20% chance of a 100-basis point Fed hike and an 80% chance of a 75-basis point rate hike.

CPI itself climbed 8.3% Y/Y in August and Core CPI rose to 6.3% Y/Y, both indicating further Fed tightening.

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