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Over the past month High Yield (junk) bonds (SPDR Barclays High Yield Bond ETF (ARCA:JNK)) have lagged the performance of Investment Grade (high quality) bonds (iShares Investment Grade Bond Fund (ARCA:LQD)). This shows a move to quality within the bond space.
In addition, money that came out of stocks during the last dip went into quality bonds instead of high yield. Bulls want to see JNK recover previous highs. As neither a bull nor a bear, but rather a guy who changes my portfolio allocations based on the evidence, I’m keeping an eye on JNK vs. LQD.
If the divergence continues it will warn of investors slowly moving away from risk.
Not coincidentally, the 10-year US bond yield is testing the post-pandemic waters, comfortably above the 3% threshold and without visible strength to retreat. Original Post
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Treasury bonds have remained on track since our post in early April, and we expect a bearish trading environment to persist until August. Here we show the updated Elliott wave...
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