Interest rate play

Hello hello, interest rates are set to rise as we know, this week will have important data to give us an indication on the hawkishness of rates hikes.

This week we have
Wednesday adp employment change
Thursday personal spending, personal income and pace prices
Friday non farm pay rolls and unemployment rate.

How do all these things give us information on the path of rate hikes?

As the fed has said they are looking to raise rates as fast as possible without destroying our economy. One quote is “our economy is strong enough to handle rate hikes”

If jobless claims come back and show a strong labor market like they did last month this will give the fed more confidence to raise rates faster.

Consumer price comes back showing inflation rising it will give the fed more desire to raise rates.

Should both come back showing we have a strong enough economy and demand for Interest rate hikes we should see some moves in interest rate hike tickers.

Some tickers I’m watching
Banks, banks benefit from higher rate hikes

Insurance companies also benefit from increased rate hikes

Bonds, bonds struggle under rate hikes
Lqd (cooperate bonds)
Hyg (high yield cooperate bonds)
Tbf (inverse bond etf)
Tyo (inverse leveraged bond etf)

Gold, gold struggled under rate hikes

I am already in bond puts but am going to be focusing on banks and looking to take some calls there.

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Based on this article from Bloomberg, the Fed maybe forced to front load rate hikes this year to taper inflation which has been more dramatic because of the Ukraine war. Everyone is now assuming a .50 point rate or half percentage point hike is coming in May. I think I’m going to keep an eye on the tickets mentioned above. I think some other ones to keep in mind are:

1: $CFG
2. $EWBC
3. $MTB
4. $SBNY
5. $SIVB
6. $SNV
7. $WFC

These are based on an “analyst” from $BAC so take these tickets with a grain of salt. I’m going to look for other banks that would benefit from inflation. My first thought would be $USB so I’m going to keep an eye on this as well.

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Thanks for pointing out that banks and insurance companies also benefit from higher interest rates - I had no idea.

However, the reason I prefer bonds is because there are less variables to worry about. With these other businesses you have to take into account all of the other aspects of their business and hope you don’t get blindsided by a negative catalyst (bad earnings, bad press, etc.)

I personally have a May call on TBF, but now I’m curious about all these other opportunities. Thanks again!

Oh also, there’s already another thread specifically talking about bonds if you’re interest.

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Seems like every ticker here did the exact opposite of what I thought it’d do. My best guess what I got wrong is rate hikes were already completely priced in, I thought there was still some left to go.