PFIX - PFIX: Revisiting Long Thesis As A Hedge
2024-01-25 09:59:40 ET
Summary
- PFIX ETF's share price has declined considerably since my November downgrade, tracking the decline in long-term treasury yields.
- However, the long-term drivers of higher treasury yields have not been resolved, with the government's budget deficits swelling by the day.
- With long-term yields back to neutral, I am reinstating a small position in PFIX as a hedge against my long-term bond holdings.
In early November, I downgraded the Simplify Interest Rate Hedge ETF ( PFIX ), as a shift in the Treasury's proposed issuance of bills vs. notes relieved some of the upwards pressure on treasury yields. Furthermore, as the Fed held steady at the September FOMC meeting, a potential pivot was starting to form.
My timing could not have been better, as my downgrade nearly high-ticked the peak in long-term yields and the PFIX ETF (Figure 1)....
PFIX: Revisiting Long Thesis As A Hedge