Monday
Jun282010
Investment Grade Outperforming Junk
Monday, June 28, 2010 at 03:44PM High-yield corporate bonds (junk bonds) peaked out back in April at the same time as equity markets. As shown in the second chart below, the ETF that tracks junk bonds (HYG) has formed a bit of a downtrend over the last couple of months, and it is currently trying to regain its footing around its 50-day moving average (white line in chart). Corporate bonds also pulled back in late April when the correction in equities began, but they have since recovered nicely, and the ETF that tracks this part of the bond market (LQD) has just made a nice breakout to new 52-week highs. This move higher has taken LQD well into overbought territory.
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Reader Comments (2)
Similar analysis and also analysis of USO/GDX here. I think the charts say it all:
http://www.wallstmemo.com/wallstmemo/2010/06/inhouse-research-credit-spreads-widening-slowdown-ahead.html
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