High-yield bond ETFs on Wednesday closed below the 50-day simple moving average for the first time since November, which is a warning sign for U.S. stocks.
Some technical analysts watch junk bond ETFs such as iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) and SPDR Barclays High Yield Bond (NYSEArca: JNK) as a sentiment indicator for how comfortable investors are with taking on risk. [Junk Bond ETFs Still Say Risk-On]
“As high-yield credit is highly correlated with equities, it’s hardly surprising that the asset class has rallied sharply since fall lows, taking part in the strong rebound in stocks and other risky assets,” says Russ Koesterich, iShares global chief investment strategist, adding that $6.5 billion has flowed into high-yield ETFs year to date. [Are High-Yield Bond ETFs Overbought?]
The junk bond funds are among the top ETF sellers in 2012 with income-hungry investors looking for more options outside low-yielding Treasuries and money market funds. [Popular High-Yield Bond ETFs Stumble]
Year-to-date, junk bond mutual funds and ETFs have garnered over $17 billion in new assets. [Junk Bond ETFs Under the Microscope]
Junk bond ETFs have shown a 68% growth rate over the past year, and added 244% over the past three years, according to a recent report.