Related: 3 Major Concerns as U.S. 10 Year Yields Test 3%

3 ETFs to Consider in an Inflationary Environment

Investors should be prepared for a higher inflationary environment and can utilize targeted ETF strategies to hedge against the negative effects of inflation.

  1. The IQ Real Return ETF (CPI) invests in a number of various ETFs, heding against inflation.
  2. The iShares Floating Rate Bond ETF (FLOT) is one of the largest ETFs dedicated to floating rate notes which limit the negative effects of rate risk.
  3. iShares TIPS Bond ETF (TIP) that tracks Treasury inflation protected securities offers investors another layer of diversification as many aggregate bond funds exclude TIPS from their holdings.

Economics and Inflation

The economics calendar will bring the monthly jobs report, which should show the U.S. economy continues to create jobs in the 10th year of the economic recovery.

“Economists expect the economy added 185,000 jobs in April, a rebound from March’s disappointing headline jobs gain while the unemployment rate is expected to drop to 4% after it held at 4.1% for a sixth-straight month in March,” according to Yahoo Finance.

Fed officials are scheduled to convene on Tuesday and Wednesday for a regular policy meeting. The Fed raised rates last month and forecast at least two more rate hikes for this year.

For latest news on the Fed, visit our current affairs category.