The highly anticipated if hardly dramatic FOMC meeting on Tuesday yielded the expected bump in the federal funds rate by twenty-five basis points. An indication of the potential for three hikes on 2017 was somewhat noteworthy, but then one should remember last December’s rate hike came with the pronouncement of an expected four hikes for this year. It is probably wise to see how markets (not economY) fully digests the current change before handicapping 2017.
As for the initial aftermath the S&P 500 was down slightly ,-o.6% while holding on to a total return of 12.76% for the year. The ten-year treasury yield continued its rise, finishing the week at 2.6%, a level not seen since January of 2014. This resulted in a -0.57% decline in the iShares US Aggregate Bond ETF (AGG) which is now off about -4.4% on a total return basis since early July.
Not surprisingly the U.S. Dollar surged, which further hurt gold. The SPDR Gold Shares ETF (GLD) dropped more than 2% for the week, but thanks to a strong performance early in the year is still up 6.5% year to date.
A Look Ahead
Next week is pretty quiet on the economic calendar. The Bank of Japan concludes a meeting on Tuesday, but not much else before holiday trading takes over. While such trading is often quiet it should always be noted that light trading volumes sometimes lead to exaggerated market moves.
Weekly Sector ETF Performance
|BIA Tracked ETF and Fund Performance|
|Week Ended Dec 16, 2016||ytd||Weekly|
|10 yr Treasury Yield||^TNX||2.27%||2.60%|
|30yr Treasury Yield||^TYX||3.02%||3.18%|
|MSCI – International||EFA||1.03%||-1.00%|
|Currency Hedged Japan||HEWJ||1.16%||0.03%|
|Curreny Hedged Europe||HEDJ||8.85%||1.06%|
|Currency Hedged Emerging Mkt||HEEM||7.06%||-2.35%|
|Short Term Treasury||SHY||0.56%||-0.24%|
|3-7 yr Tsy||IEI||0.42%||-0.69%|
|7-10 yr Tsy||IEF||-0.43%||-0.91%|
|20 yr Tsy||TLT||-1.16%||-0.31%|
|Inflation Protected TSY||TIP||2.54%||-1.52%|
|Short Term Municipal||SHM||-0.81%||0.04%|
|Investment Grade Corp||LQD||4.20%||-0.52%|
|1-3 yr corporate||CSJ||1.22%||-0.30%|
|Junior Gold Miners||GDXJ||55.44%||-12.64%|
|Metals & Miners||XME||111.70%||-5.41%|
|REITs (Real Estate Inv Trsts)||VNQ||6.47%||-0.70%|
|MLPs (Mastr Lmtd Prt)||AMLP||13.23%||1.47%|
|China A shares||ASHR||-14.40%||-5.86%|
|Ivy Asset Strategy – Inst.||-5.05%||0.00%|
|Pimco All Asset – Inst.||12.19%||-0.70%|
|Pimco All Asset All Auth – Inst.||12.34%||-0.62%|
|James Golden Rainbow Fd||3.93%||-0.65%|
|Vanguard SP500 Index Fd||12.72%||-0.03%|
|Vanguard Balanced Fd||8.71%||-0.38%|
|Catalyst Macro Strategy – Inst.||-31.03%||-1.35%|
|Cognios Market Nuetral Fd||-1.44%||-0.62%|
|Hull Tactical US ETF||7.82%||-0.15%|
|Chiron Capital Allocation Fd||10.83%||-0.46%|
DISCLAIMER: Nothing in this article should be construed as a personal recommendation or advice. Nor should anything in this article be construed as an offer, or a solicitation of an offer, to sell or buy any investment security. Barnhart Investment Advisory clients and principals may hold positions in any securities mentioned in this article. Investors should conduct their own due diligence and seek the advice of a financial and/or investment professional before making any investment decisions.