×

On the 11th day of Fedmas, Yellen sent to me...

During each of the 12 trading days before the Federal Reserve's interest rate decision this Wednesday, CNBC Pro is highlighting a single strategy that should work if the central bank hikes rates, as many on Wall Street expect. We found these trades using Kensho, a powerful tool used by hedge funds to analyze historical market data.

In the holiday spirit, we will call this series the "Twelve Days of Fedmas." Monday marked the 11th day so we've added another line, "11 Black & Deckers."

On the 11th day of Fedmas,

Janet Yellen sent to me:

11 Black & Deckers...

10 rates a-leaping ...

Nine Halliburtons ...

Eight Northrop Grummans ...

Seven SOX a swimming ...

Six ETFs-a-leveraged ...

FIV-V-V-E GOLD-D-D-D M-A-N Sachs.

Four Lincoln Nationals ...

Three ETNs ...

Two General Motors ...

And a pair trade in Curr-en-cies!

Traders are betting big that the central bank will raise rates on Wednesday for the first time in nine years. If the Fed move sparks an increase in long-term rates, there are 12 trades and more for investors, if history is any guide.

CNBC Pro ran the numbers on Kensho and found that stocks directly leveraged to an improving consumer economy, like Stanley Black & Decker, do well when long-term interest rates increase. We looked at all the one-month periods of significant moves higher in rates over the last decade to see just how well these stocks did.

Contact Investing

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    Get these newsletters delivered to your inbox, and more info about about our products and service. Privacy Policy.