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Metal and energy stocks were among those reversing their recent surge, with regulators stepping in to calm the boom/bust cycle taking hold of Chinese commodity futures. DB Harvest China A-Shares (ASHR) finished down roughly 3% on selling pressure.
Top notable creations this week were SPDR Gold Trust (GLD), iShares Investment Grade Corp Bond (LQD), and iShares TIPS Bond (TIP).
Top notable redemptions were iShares High Yield Corp Bond (HYG), iShares MSCI Eurozone (EZU), and SPDR Industrials (XL).
Headlines out of Brazil kept iShares MSCI Brazil (EWZ) choppy throughout Friday. The Supreme Court ordered the countries house speaker, who led the impeachment drive, to relinquish his post. The decision isn’t likely to stop the impeachment process, which is put to a vote on May 11. Fitch also downgraded Brazil’s credit rating further into junk, from BB+ to BB, citing political uncertainly that is sapping domestic confidence and undermining governability.
Looking at equities, the buying interest continued for iShares Mortgage Real Estate (REM) as REITS outperformed. SPDR Utilities (XLU) underperformed over the day. It seems Gundlach’s pair trade that was suggested on Wednesday has become reality.
The idea being that the flight to Utilities has increased its book value to 1.9x while REITS have stayed at 0.8x, and expecting the historically correlated sectors to converge over time. Con Edison dragging the XLU basket down with an earnings miss helped as well.
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WallachBeth’s SCOUT team also commented on XLU’s valuation, which has gone from a yield above 4% to only 3% and from just above 15x forward earnings to almost 18x as safety and low volatility equities have been artificially pumped up by allocators. In internationals, iShares MSCI Peru (EPU) looked to have an active block seller.
Finally, for Fixed Income/Commodities, SPDR 1-3 Month T-Bill (BIL) had a large seller after the open, trading roughly 3x ADV. VanEck Vectors Emerging Markets High Yield (HYEM) looked to have some activity over the day; trading 23x ADV on what looked to be buyers. SPDR Emerging Markets Bond (EBND) had some massive buyers, along with WisdomTree Emerging Markets Local Debt (ELD).
VanEck Vectors Wide Moat (MOAT) caught a large block seller, trading 16x ADV. WallachBeth also noticed a roll into longer dated high yield corporate bonds. The seller exited Guggenheim BulletShares 2016 High Yield (BSJG), and looked to buy Guggenheim BulletShares 2018 High Yield Bond (BSJI). PowerShares DB Commodity (DBC) looked to have a large inflow, as the basket of commodities had an impressive pop Friday morning.
For more information on the Equity ETF market, visit our Equity category.