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Rate Hike Brings Opportunity With This Bond ETF

BY | ETF Database
6:14 am ET 09/17/26 | 16 VIEWS
As widely expected, the Federal Reserve on Wednesday lifted interest rates by 25 basis points. Add to that the increasing consensus that the central bank, looking to cool inflation, will deliver one more rate increase before the end of 2026. Time will tell if this is the start of 2022-style rate tightening campaign or if one or two rate hikes is enough to accomplish the objective of thwarting inflation. Either way, advisors and fixed income investors can prepare with rate-hedged ETFs like the WisdomTree Interest Rate Hedged U.S. Aggregate Bond Fund (AGZD C).AGZD Built for This MomentArguably, AGZD is one of a small number of fixed income ETFs that can credibly steer investors through a turbulent time in the bond market. If nothing else, the ETF’s rate-hedged focus is useful because, if new Fed Chair Kevin Warsh has been clear about anything, it’s his desire to quash inflation. “Chairman Warsh had been ‘talkin’ the talk’ and giving the impression that he was an inflation hawk, but it wasn’t until this Fed gathering that he finally was ‘walkin’ the walk,’” noted Kevin Flanagan, head of investment and fixed income at WisdomTree. “Getting to this point, however, was not a smooth process. In fact, the Chairman put himself in this position through his prior rhetoric and, perhaps most importantly, his refusal to provide any forward guidance.” Put succinctly, Warsh and other Fed members know that the rate hike announced on Wednesday could take a while before it bears fruit in terms of cooling inflation. That could compel the central bank to operate out of an abundance of caution, potentially going back to the rate hike well before the end of this year. If that proves accurate, AGZD likely benefits. “There’s an age-old motto: When you see a chance, take it,” added Flanagan. “The Fed took it, and now the question becomes: What next? If upcoming data continues to show solid growth and above-target, sticky inflation, we don’t necessarily see this rate hike as the beginning of a new tightening cycle, but rather as a removal of some of the rate cuts that occurred during the September–December period of last year.” For more news, information, and analysis, visit the Modern Alpha Content Hub.DisclosuresThis article was prepared as part of WisdomTree’s general paid sponsorship of VettaFi | ETF Trends. This specific content within and any opinions expressed therein belong solely to VettaFi and do not reflect the opinion or analysis of WisdomTree, its employees, or its affiliates. Content published on VettaFi | ETF Trends is provided for educational purposes only and should not be considered investment or tax advice. For investment or tax advice, please consult a financial professional. WisdomTree is an independent company, unaffiliated with VettaFi | ETF Trends. WisdomTree has not been involved with the preparation of the content supplied by VettaFi | ETF Trends. It does not guarantee, or assume any responsibility for its content.

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