Bond ETFs Breaking Out

October 22nd at 3:12pm by Tom Lydon

Ten-year U.S. Treasury yields have surged over 39%, but a different tune has been sung over the past few days. Yields on ten-years have slid 8.2% as investors see a more sanguine outlook for bonds, predictably benefiting some of the largest bond ETFs in the process.

The iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) and the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) are among the large bond ETFs that have recently made important technical breakouts, indicating more upside could be on the way, as technical analyst Chris Kimble notes.

With 10- and 30-year yields being rebuffed at important resistance points, the iShares Core Total U.S. Bond Market ETF (NYSEArca: AGG) and the SPDR Barclays High Yield Bond ETF (NYSEArca: JNK), the second-largest junk bond ETF by assets, have also made notable advances over the past few days. [Bond ETFs in a Post-Default World]

Performances for that quartet over the past five days have been strong as TLT is up 3.4% and AGG is higher by 1.11%. JNK is higher by 1.2%, but the market has favored high-grade corporates as LQD is up almost 2%. [Another Look at Junk Bond ETFs]

Still, flows data are mixed for those ETFs. In the past week, investors have pulled $246 million from TLT and $193 million from LQD. In what may be a sign that risk appetite is incrementally rising in the debt markets, JNK has hauled in $403 million.

SPDR Barclays High Yield Bond ETF

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of JNK, LQD and TLT.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.