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.


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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