SPDR Barclays High Yield Bond (NYSEArca: JNK) was down for the seventh consecutive session at Thursday’s open with some investors continuing to pull money from junk bond ETFs as credit spreads widen on recession fears.
Trading volume in JNK has been rising the past week and the high-yield fund has stumbled below its 50-day moving average for the first time since June.
Investors have withdrawn hundreds of millions of dollars from JNK and iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) so far in November.
Earlier this week, HYG saw the biggest one-day outflow in its history, Bloomberg News reported. High-yield funds are falling in November and haven’t seen a down month since May. [Yield Chasers Starting to Flee Junk Bond ETFs]
Despite the recent selling, the junk bond funds remain among the best-selling bond ETFs in 2012 as investors stretch for yield in a low-rate market. HYG has attracted $5 billion year to date, while JNK has gathered $2.5 billion, according to IndexUniverse flow data.
The two junk bond ETFs are paying yields of nearly 6%, which have enticed investors starved for income.
However, their recent price weakness has raised concerns over credit markets, the fiscal cliff and the U.S. economy. They may also be sending a negative signal for equities.
“High-yield funds are quality leading indicators for the stock market,” says Chris Kimble at Kimble Charting Solutions.
SPDR Barclays High Yield Bond
Full disclosure: Tom Lydon’s clients own HYG and JNK.