Equity markets stayed flat in Tuesday trading, while the 10 Year T-Bill yield slid below the 4% mark. While it was a relatively quiet day on the news and data front, the Fed minutes from the March 16th meeting were released, showing a “lingering concern about the U.S. economy’s prospects, with policymakers indicating they were in no hurry to raise interest rates” according to Reuters. “The duration of the extended period prior to policy firming might last for quite some time and could even increase if the economic outlook worsened appreciably or if trend inflation appeared to be declining further,” the minutes said. Investors took this to mean that the U.S. economy is not out of the woods yet and that the Federal Reserve is not as optimistic about some of the more positive data that has been released as of late.
The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, inched up by 0.90 points, or 0.1%, to close at a new 2010 high of 1,063.38. Trading was once again light at just 500 million shares, suggesting that investors are taking it easy ahead of the upcoming earnings season.
One of the main winners in Tuesday trading was the Vanguard REIT ETF (VNQ) which rose by 2.3%. This came after broad strength in the REIT market as RBC Capital and UBS upgraded portions of the sector. UBS boosted its price targets for office REITS while RBC Capital raised its targets for multifamily residential REITs, helping to send a majority of the holdings in VNQ sharply higher.VNQ has been on quite the run as of late with its shares soaring higher by close to 14.7% in 2010 trading.
A big loser in Tuesday trading was the United States Natural Gas Fund (UNG) which sunk by 4.1%. This came after the Energy Department said today that output will rise by close to 3.7% from last month’s levels, which is expected to translate into a 14% price decline according to the government. “The report makes a lot of sense,” said Kyle Cooper, a managing director at energy consultant IAF Advisors in Houston for an article in BusinessWeek. “We’re seeing a lot of rigs and certainly the pipeline flows indicate there’s a lot of gas.”
Disclosure: No positions at time of writing.