Retail, China, and Muni Bond ETFs To Watch This Week

With the majority of large-cap company earnings announcements in the rear view mirror, stocks will open trading on Monday with few immediate catalysts.  Nevertheless, the SPDR S&P 500 ETF (SPY) is within half a percent of its all-time high and Friday’s strength may give the bulls some short-term confidence.  

The week ahead features several important economic data points including retail sales, business inventories, producer price index, and consumer sentiment data.  

Here are the key ETFs to watch for the week of Monday, May 11:

Market Vectors Retail ETF (RTH)

April retail sales data will be released on Wednesday and the consensus expectation is for a modest gain of 0.1 percent.  The actual results of this consumer-oriented statistic will likely impact RTH, which tracks the 25 largest U.S.-listed retail companies.  

Top holdings in this market cap weighted ETF include Amazon.com Inc (AMZN) and Wal-Mart Stores Inc (WMT).  So far this year, RTH has gained a healthy 7.03 percent as large consumer discretionary companies like AMZN have muscled prices higher.  

The stage is now set for RTH to gravitate towards new highs if retail sales data comes in above expectations.  

iShares China Large-Cap ETF (FXI)

Over the weekend, China’s central bank cut its benchmark lending rate for the third time in six months. The news will likely play a significant role in the trading of FXI this week.  

This ETF tracks China’s 50 largest stocks and has over $7.4 billion in total assets.  So far this year, FXI has gained over 21 percent despite a modest dip in the first week of May.  

The strong momentum in the Chinese stock market has been a consistent theme all year and this latest fiscal policy move may help sustain those gains.  

iShares National AMT-Free Muni Bond ETF (MUB)

Nearly every corner of the fixed-income market has felt the impact of rising interest rates over the last three weeks as bond prices have fallen.  Municipal bonds in particular have appeared to demonstrate lackluster performance with respect to their peers.

MUB tracks a broad-based basket of 2,700 investment grade municipal income securities across a range of states.  This ETF has fallen down to its 200-day moving average and erased all of its gains for the year.

Despite a modest bounce in other quality areas of the bond market late last week, MUB was unable to garner any convincing momentum and may be showing concerning signs of weakness.