The Best Performing Inverse/leveraged ETFs of the week

Nasdaq Composite and Russell 2000 added 0.6% and 1.4% last week, while the S&P 500 lost 0.3% and 0.1%, respectively. It was quite a news-packed week last week. Some of the notable data points included higher-than-expected inflation and retail sales numbers, which, in turn, contributed to a more hawkish Federal Reserve, boosting the bets on a Fed that will act more aggressively.

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From 6.5% in December, the annual inflation rate in the United States decelerated slightly to 6.4% in January, from 6.5% in December. As the market expected, inflation came in at 6.2%, higher than the market's forecast. In spite of this, it was still the lowest reading since October 2021.

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This month, the CPI increased 0.5% as compared to the previous month, which is the highest increase in three months following a 0.1% increase in December. As quoted by Trade Algo, economists surveyed by Dow Jones expected the CPI to rise by 0.4%, in line with expectations.

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In addition to this, retail sales in the United States increased 3% sequentially in January of 2023, the biggest increase since March 2021, which was a lot higher than market expectations of a 1.8% increase for the month. Due to an improving labor market, the reading showed that American consumers continued to spend as a result of an upbeat reading. December's drop of 1.1% was followed by a gain of 1.2% in January.

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Inflation and retail sales data that were higher than expected triggered speculation that the Fed may act pretty hawkish. Furthermore, the jobs data were also positive, giving the Fed more flexibility in tightening monetary policy.

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At the beginning of last week, the benchmark 10-year U.S. treasury yield was 3.72%, which is the lowest level since 1926. Nevertheless, the yield of the 10-year Treasury increased to 3.86% after the release of both of those previously-mentioned economic data points on February 16, 2022. In the end, the yield ended up dropping to 3.82% to close out the week.

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The confidence of U.S. homebuilders has risen for the second consecutive month to the highest level since September 2022. In February, the National Association of Home Builders/Wells Fargo gauge of builder sentiment rose to 42, the highest level in ten years.

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Here are a few inverse/leveraged ETFs we highlighted last week against this backdrop.

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ETFs in Focus

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Inverse Leveraged Energy

Microsectors U.S. Big Oil Index -3X ETN – Up 27.1%

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Ultrashort Bloomberg Natural Gas -2X ETF – Up 26.1%

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There was a considerable drop in oil prices last week as traders feared that future U.S. interest rate hikes could lead to a significant slowdown in growth and negatively impact demand as a result. Investors began to feel nervous as signs of a large supply of crude oil and fuel emerged.

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Leveraged Cryptocurrency

Graniteshares Coinbase 1.5X Daily ETF – Up 20.9%

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Bitcoin, the world's largest digital currency by market value, surpassed $25,000 for the first time since mid-2022. On Feb 16, it gained 8.2%, its largest one-day gain in about a month. Short squeezes historically send Bitcoin prices higher, which caused the rally. During the past 24 hours, investors liquidated $60 million of bitcoin short positions, according to crypto data provider Coinglass.

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Leveraged Disruptive Innovation ETFs

Axs 2X Innovation ETF – Up 12.8%

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This fund offers exposure to the next-generation internet, electric vehicles, genomics, and fintech sectors. If one believes that the bullish proposition for disruptive innovation will remain intact and growth stocks valuations have reached an attractive level, then TARK should be an intriguing bet for those who believe the bullish proposition for disruptive innovation will remain intact.  Considering that next-generation internet, the digital economy, and electric vehicle investing have been doing better since the start of the year, TARK could have a good reason for outperforming the market last week.

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Inverse/Leveraged Paypal ETFs

Axs -1.5X Pypl Daily ETF – Up 12.8%

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PayPal (PYPL) lost about 7.5% last week as the company reported mixed earnings. There are also job cuts at PayPal. In 2023, the company's CEO will also leave.

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