Yesterday’s rally failed to carry over to Wednesday’s session, as Fed Chairman Bernanke detailed plans to tighten credit and suggested that the rate paid to banks on excess reserves may become the main policy tool. France and Germany continued to weigh options for propping up Greece’s mounting budget issues, even as Greek civil servants went on strike to protest a wage freeze and cuts in bonuses. Elsewhere, Google announced plans to experiment with faster internet services and AIG reported that it will implement a new incentive structure.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, fell 1.9 points, or 0.2%, to close at 995.43. The ETFdb 60 is now down 3.7% on the year. Aggregate volume was relatively heavy at 875 million shares, as the blizzards that swept across the northeast part of the country did little to curb activity on Wall Street.
Junk bond ETFs were among the day’s biggest losers, and the iBoxx $ High Yield Corporate Bond Fund (HYG) dropped 1.4% on the day. After high yield debt surged in 2009, many corporations have taken advantage of the favorable financing environment, as almost $26 billion of junk-rated debt has been issued already this year. Ongoing worries over Greece’s deficit also contributed to Wednesday’s decline.
Agricultural commodities continued a mini-rally, as the PowerShares DB Agriculture Fund (DBA) added 0.8%. Corn, oats, and soybeans all climbed higher on the day. Yesterday, the U.S. Department of Agriculture said demand for corn to make ethanol will rise 17% this year.
Disclosure: No positions at time of writing.