Exchange traded funds (ETFs) are watching and waiting as the Federal Reserve meets this morning. The central bank is expected to make an announcement this afternoon, although few expect any surprises.
While no one argues with the fact that, eventually, the Fed is going to have to raise rates, few seem to feel that any such day is around the corner. Once the Fed speaks, though, investors will be parsing the statement for subtext. But the Fed has said it again and again: inflation is not an imminent threat, and rates will stay put for now. iShares Barclays 1-3 Year Treasury Bond (NYSEArca: SHY) is flat so far today. [8 ETFs That Can Add Income.]
Joblessness may not improve anytime soon, according to a member of the Obama administration. In fact, the exact forecast was dire: employers in the United States won’t hire enough workers this year to nudge the jobless rate much lower than the current 9.7%. This news lends credence to the argument that the Fed could very well stay put on rates for the time being. On the positive side, the administration doesn’t think that the situation will worsen.
Emerging markets could take a little breather this year, if one expert is correct. The man who coined the term “emerging markets,” Antoine van Agtmael, chief investment officer at Emerging Markets Management, says shares could waver in a 20% up or down range this year. It won’t be the selloff of 2008, but it won’t be the bonanza seen in 2009. Emerging markets still have value and although the returns may not be what they had been, you can’t fight the trend. iShares MSCI Emerging Markets (NYSEArca: EEM) is up about 0.8% so far today. [Brazil ETFs: Using Caution If There’s a Bubble.]
For full disclosure, Tom Lydon’s clients own shares of SHY.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.