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Commodities, short bonds show market momentum beyond equities

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US Equities (^GSPC, ^DJI, ^IXIC) have enjoyed a tech-led rally over the last few months, with some indexes reaching record highs. However, as a possible correction looms, investors may seek avenues to position their investments away from tech.

Allianz Investment Management Head ETF Market Strategist Johan Grahn and AlphaSimplex Chief Research Strategist Katy Kaminski join Yahoo Finance to discuss safe investments and sectors still experiencing momentum.

Grahn explains that risk-mitigating ETFs may benefit cautious investors: “They provide a structure inside of an ETF that gives you upside exposures. If you buy them today, you can still make money on the upside, up to a certain level, like a cap, but you’re buffered underneath on the downside. So if the market is down and you have options, either 10% or 20%, you don’t lose any money over a defined outcome period, so over 6 months or 12 months for example. So you can partake in the market, but you don’t have to go all the way into the market. “

However, the market is still seeing momentum beyond equities, Kaminski explains: “We’ve seen divergence across commodities. We’re following things like cocoa. We’re following things like corn, and also soybeans, pretty large trends there which may start telling us where inflation could be going next. If we start seeing that revert, which we have seen a little bit this month, there’s some chance that inflation higher could provide some interesting opportunities in the commodity sector, but also short bond positioning is also interesting right now –– this idea that cuts are possible coming later this year, rather than sooner. “

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor’s note: This article was written by Nicholas Jacobino

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