ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Trending: Oil Continues March Ahead Due to Political and Supply Woes
News
Share

Trending: Oil Continues March Ahead Due to Political and Supply Woes

Iuri StrutaMay 17, 2018
2018-05-17

Crude oil continued to climb higher this week due to global political risks and the end of the Iran deal, trending in the first place for the second consecutive week.

Meanwhile, a flattening yield curve has directed attention to high-yield bonds, while government bonds stood third on the list. Cloud computing and consumer staples close the list.

Check out our previous trends edition at Trending: Oil Climbs to Multi-Year Highs on Iran Sanction Woes.


Content continues below advertisement

Oil Moves Sideways After Inventory Report

Crude oil is trending for the second consecutive week, generating a 230% increase in traffic. All eyes are on the geopolitical scene ever since President Donald Trump introduced uncertainty in the markets by re-imposing economic sanctions on Iran, a country responsible for nearly four million barrels of oil per day. Coupled with falling supply from Venezuela and an ongoing deal between the Organization of the Petroleum Exporting Countries (OPEC) and Russia to cut output, the cancellation of the Iran deal put significant upward pressure on oil markets.

United States Oil Fund (USO B) has risen 6% in the past month, extending year-to-date gains to as much as 20%. In the past five days, WTI crude largely moved sideways but stayed above the $70 per barrel level.

Sign up for ETFdb.com Pro and get access to real-time ratings on over 1,900 U.S.-listed ETFs.

US Oil Fund Stock Chart

The Paris-based Energy Information Association (EIA) said on Wednesday crude stockpiles dropped 1.4 million barrels for the week ended May 11. The EIA said the potential supply shock from Iran and Venezuela could present a major challenge for producers to halt price rises. In particular, if Iran’s exports drop consistently, the effects on the oil market will be felt. Last time sanctions were imposed on Iran, which is the world’s fifth largest producer, output fell by 1.2 million barrels per day. In the current case, the extent of the disruption remains a mystery, with the picture likely to become clearer in the next few months.

To keep the markets stable, Russia and the OPEC may decide to abandon their landmark agreement to shrink production by 1.2 million barrels per day, with Saudi Arabia potentially stepping in. All eyes will be on the next OPEC meeting, which takes place in mid-June.

High-Yield Bonds

High-yield bonds have been in the spotlight this week, as the yield curve is flattening amid rising interest rates and a booming economy in the U.S. High-yield bonds have taken the second spot in the list with an increase in viewership of 211%.

As a result of an increasing trend in 10-year Treasury yields, high-yield bonds have taken a hit lately, with iShares iBoxx $ High Yield Corporate Bond (HYG B+) dropping more than 1% in the past five days alone. Since the beginning of the year, (HYG B+) is down more than 2%.

High Yield Corp Bond iShares iBoxx ETF

With the 10-year Treasury yields hovering beyond the 3% threshold, high-yield bonds felt the pressure. Outflows from bond funds have been ongoing for the past months, although performance held up. Despite rising yields, high-yield bonds are not expected to default en masse, in no small part thanks to a strong economy and rising earnings across the board. The riskier bonds connected to the U.S. shale sector may benefit going forward given the rising oil prices.

Further rate increases by the U.S. Federal Reserve may put many high-yield bond issuers in difficulty, particularly if an economic deceleration follows.

Government Bonds

U.S. Treasury yields have held their ground this week, despite some weak economic data. Government bonds ETFs have seen their traffic advance 98%, far below high-yield bonds. Benchmark 10-year Treasuries have continued their slide this week, although yields have increased above the psychological 3% threshold. iShares 7-10 Year Treasury Bond (IEF B+) has dropped 0.62% in the past five days, extending year-to-date losses by nearly 5%. When bond prices fall, yields rise.

7-10 Year Treasury Bond iShares ETF Stock Chart

For a deeper analysis on individual ETF investments such as (UUP B) or (QQQ B+), use our ETF Analyzer tool. You can select ETFs by Category or Type as well as add individual ticker symbols to compare performance, expenses and dividend yield, among other metrics.

Retail sales in the U.S. were in line with expectations, rising by 0.3% in April. Core retail sales, meanwhile, rose by the same amount but were 20 basis points below the forecast. Housing starts disappointed, coming in at 1.28 million in April against 1.32 million expected by economists.

Although economic activity is slowing down, rising oil prices may put pressure on inflation, something that would force the Federal Reserve to raise rates sooner than expected.

Cloud Computing ETFs Outperforming

Cloud computing stocks have had a good ride recently, outperforming many indices, including technology-heavy peers. Cloud computing ETFs have taken the fourth spot in the list with a rise in viewership of 76%. The only ETF focusing on the emerging cloud computing sector, First Trust ISE Cloud Computing Index Fund (SKYY B), has increased around 13% since the beginning of the year, nearly double the performance of PowerShares QQQ (QQQ B+).

Cloud Computing ETF Stock Chart

The outperformance has largely occurred thanks to strong earnings reported by the ETF’s exponents, including Netflix (NFLX), which is that largest holding in the fund and makes up 6.81%, and Amazon (AMZN), accounting for 5.3% of (SKYY B). Amazon, for instance, has largely become profitable in recent years due to the outperformance of its cloud computing division, called Amazon Web Services.

Consumer Staples Dropping on Poor Results

While cloud computing ETFs are among the best-performing assets, consumer staples is one of the sectors posting heavy losses. As consumer tastes shift from brick and mortar to online to exclusive products, with Amazon being a primary beneficiary, consumer staples are suffering. Indeed, Consumer Staples Select Sector SPDR Fund (XLP A) has declined more than 12% since the beginning of the year, underperforming the S&P 500 by around 10 percentage points.

S&P 500 Consumer Staples Sector SPDR Stock Chart

XLP’s largest exponent, Procter & Gamble (PG), which makes up nearly 12% of the fund, is down nearly 20% since the beginning of the year, after the company reported two straight quarters of disappointing results and poor revenue guidance. Coca Cola (KO) and Pepsi (PEP), collectively making up nearly 20% of the fund, have dropped 9% and 19%, respectively, since the beginning of the year, as consumer habits in the U.S. are shifting to healthier alternatives. Moreover, Walmart (WMT) has tumbled more than 12% since January 1.

The Bottom Line

This week, oil continued its march ahead as investors weighed the implications of Venezuela and Iran dropping their output. As the yield curve is flattening, high-yield bonds are suffering outflows, although strong earnings and high oil prices could offset the negative impact. Government bonds have crossed the psychological 3% threshold. Cloud computing ETFs have outperformed their technology counterparts thanks to rising and high-profit margins, while consumer staples stocks have disappointed.

By analyzing how you, our valued readers, search our property each week, we hope to uncover important trends that will help you understand how the market is behaving so you can fine-tune your investment strategy. At the end of the week, we’ll share these trends, giving you better insight into the relevant market events that will allow you to make more valuable decisions for your portfolio.

» Popular Pages

  • Tickers
  • Articles

Jan 26

Despite GDP Growth, Recession Fears Still Linger

Jan 26

Commodities Have Their Say as Bonds Soar

Jan 26

Diversify Portfolios by Challenging Home Country Bias

Jan 26

Look to Equal-Weight RYT for Seagate Exposure

Jan 26

ETF of the Week: SPDR S&P 500 ETF Trust

Jan 26

Use USNZ To Help Meet Paris Agreement Goals

Jan 26

China Reopening Foregrounds Commodities

Jan 26

Don’t Ignore MUSI, a Current Income ETF

Jan 26

Join the Finance Community to Support These Non-Profits at Exchange

Jan 26

Don’t Miss Out: KARS Is on the Rise

QQQ

Invesco QQQ Trust

SPY

SPDR S&P 500 ETF Trust

VOO

Vanguard S&P 500 ETF

VGT

Vanguard Information...

SMH

VanEck Semiconductor ETF

XLK

Technology Select Sector SPDR...

VTI

Vanguard Total Stock Market...

SOXX

iShares Semiconductor ETF

BLOK

Amplify Transformational Data...

META

Roundhill Ball Metaverse ETF


Content continues below advertisement

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X