ETF Trading Report: Livestock, Long Treasury ETFs in Focus - ETF News And Commentary

American stocks had another choppy session as indexes finished mixed during Wednesday trading. The Dow fell by about seven points while the S&P 500 added two points on the day. Meanwhile, the Nasdaq put up a solid performance, adding 0.5% while tech bellwether Cisco (CSCO) reported decent results after the bell, hiking its dividend and likely boosting sentiment heading into the end of the week for the tech sector.

Beyond this, investors saw pretty mixed trading from a sector perspective, as utilities and basic materials fell broadly. Meanwhile, financials, tech, and services were broadly higher, although there was some weakness in the major health care segment (watch ETF Investing 101).

Currency trading was again mixed with the dollar rising slightly against most of the world’s major currencies, and especially so against the yen and the Aussie dollar. Treasury rates did continue to rise, however, as the 10 year added another eight basis points to finish the day above the 1.8% mark.

Commodity markets did add broadly on the session, as orange juice (+4.6%), gasoline (+2.5%), and soybeans (+2.3%), led the way on the upside. For losers, natural gas fell almost 2.7% while investors saw a similarly bad performance in the lean hogs market as well.

For ETF trading, volume did edge up a little but it was still quite low when compared to historical levels. However, there was some good volume in a few segments, as a couple of sector products, national ETFs, and commodity funds saw outsized levels of trading during Wednesday’s session.

In particular, ETF investors saw a big move in trading for the iPath DJ-UBS Livestock TR Sub Index ETN (COW). The product usually does about 31,000 shares in volume on a normal day but saw over 107,000 shares move hands during Wednesday trading (see Bet on Higher Food Prices with These Three ETFs).

A large reason for the increase was probably due to the aforementioned volatility in the lean hogs market. Contracts representing this commodity make up about 30% of the portfolio and were a large reason for COW’s 0.9% decline in today’s trading. Luckily for investors in this product, live cattle, which make up the rest of the assets, didn’t have such a bad day, helping to buoy shares of this product for the day.

Another fund which saw outsized trading levels was the Vanguard Extended Duration Treasury Index ETF (EDV). This fund usually sees trading levels of just under 39,000 shares in a normal day but did volume of just over 96,000 shares today (read Is The Bear Market For Bond ETFs Finally Here?).

This large increase in trading was probably due to the weak Treasury market performance as of late which pushed EDV down about 2.2% on the session and continued the fund’s trend off of its 52 week highs. In fact, the 30 year Treasury is now yielding about 2.9%, close to 40 basis points higher than its level just one month ago.

Since Treasury bond yields and prices move inversely, this increase in rates has crushed long term products like EDV over the past few weeks. The Vanguard fund is actually down about 8.1% in the past month, although it is still up about 0.9% in the year-to-date period.

(see more in the Zacks ETF Center)

IPATH-DJ-A LVST (COW): ETF Research Reports

VANGD-EX DUR TR (EDV): ETF Research Reports

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