Doves Take The Wheel
U.S. equity markets staged a broad rally in the holiday-shortened week, while benchmark interest rates dipped to the cusp of multi-year lows, as investors leaned into December rate cut expectations. Reports that Kevin Hassett- a close Trump ally- has emerged as the frontrunner to succeed Fed Chair Powell in 2026 further sharpened expectations for a more explicitly dovish policy approach. The "Hasset trade" revived appetite for long-duration and rate-sensitive equity sectors, as investors priced in a lower terminal-rate environment and a steeper path of 2026 policy accommodation.
Fixed Income ETFs Set New $325 Billion Record
With $1.01 trillion of net inflows for the year, ETFs are sure to break the 2024 record of $1.1 trillion, likely in November. However, with $325 billion of new money as of October 15, fixed income ETFs have already hit a new milestone for the year.
VIDEO: ETF of the Week: TMB
On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research, Todd Rosenbluth, discussed the Thornburg Multi-Sector Bond ETF (TMB) with Chuck Jaffe of Money Life. The pair discusses several topics related to the fund to give investors a deeper understanding of the ETF.
Powell Pivot Sparks REIT Rebound
U.S. equity markets notched another series of record highs this week, surging into the weekend after surprisingly dovish commentary from Federal Reserve Chair Powell, who hinted at imminent rate cuts. Powell used his final Jackson Hole speech as Fed Chair to deliver a clear policy pivot, an unexpected reversal after months of insistence that tariff-related inflation warranted a hawkish framework. Markets were equally relieved by the policy-focused nature of Powell's speech amid speculation that the address may be used instead as a potential defiant sermon on central bank independence.
Behind The (Revised) Curve
U.S. equity markets fell sharply this week, while benchmark interest rates retreated to three-month lows, after revised employment data showed that job growth was far weaker than initially reported. The BLS payrolls report showed softer-than-expected hiring in July and the steepest two-month downward revisions to jobs growth since 2020, raising concern that the Fed may be "behind the curve." The downward revisions came days after Fed Chair Powell used it as the primary evidence for "solid" labor markets, which justified the FOMC's decision to keep rates in "restrictive" territory.
Replacing AGG With 2 ETFs That Cost At Least 8× More Can Make Sense
Some define AGG as a free ETF, considering an expense ratio of 0.03% and spreads and NAV deviation at their minimums. And it is the benchmark of the market in the intermediate‑maturity segment, just as the S&P 500 is for equities. And yet I believe fully passive management risks missing value, unlike the equity market, well served by passive funds.
Trade War Redux
U.S. equity markets retreated from record highs this week after the White House reignited its tariff offensive with a wave of aggressive levies and additional punitive threats. While inflation data has indicated that the 10% tariffs were efficiently absorbed, the pivot back towards Liberation Day tariff levels raises concern that recent deflationary offsets may be overwhelmed. After closing at record highs for two straight weeks, the S&P 500 retreated by 0.3% this past week, trading in a relatively tight trading range as investors geared up for earnings season.
5 Most-Loved ETFs of Last Week
Bond ETFs like AGG and SGOV led inflows last week as Treasury yields dropped and equity ETFs saw outflows.
SCCR May Be Better Than AGG, But It's Too Soon To Tell
For most investors, the iShares Core U.S. Aggregate Bond ETF is the gold standard of bond investing, and constitutes the entirety of many investors' bond allocations. The Schwab Core Bond ETF aims to provide a better, more informed allocation to bonds than AGG. It does this with an increased allocation to municipal bonds, longer effective duration, and active selection of corporate bonds.
Powell On The Hot Seat
US equity markets steadied this past week while bond markets rallied as investors parsed a surprisingly solid slate of economic data and a decent start to corporate earnings season. Early week gains were pared following comments from Fed Chair Powell regarding the inflationary impact of tariffs and the reluctance of the Fed to step in to support markets. The hawkish comments sparked a series of blistering critiques by President Trump, accusing the Fed Chair of "playing politics" and posting that his "termination cannot come fast enough."
AGG: Dollar Recycling System Halt May Trigger Largest Ever Bond Market Crash
The recent crash in AGG and other bonds and a declining US dollar suggest a significant repricing for debt monetization risk. Foreign selling of US Treasuries, particularly by countries like China, is potentially driving this shift, indicating a potential long-term collapse of the US dollar recycling system. The correlation shifts between AGG, the US dollar, and equities highlight foreign activity's critical role in the bond market's changes, ending AGG's historically inverse correlation to stocks.
Look to This ETF Income Suite Amid Volatile Markets
Market volatility remains pronounced as of midday trading on Friday as investors digest rapidly shifting global trade dynamics. Advisors and investors looking to potentially harness volatility for income would do well to consider the NEOS options-based ETF suite this year.
