“If the trend is your friend, then expect lower yields in the near future,” Horan said. “If however you think next week’s FOMC meeting will be the event that turns the tides then now would be the inversion point.”
Additionally, the yield on the S&P U.S. Issued Investment Grade Corporate Bond Index has also been steadily rising since Oct. 15. The index’s yields rose 14 basis points to 2.77%. Since the Oct. 15 high, the iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) is 2.2% lower.
Shares iBoxx $ High Yield Corporate Bond ETF
For more information on the speculative-grade debt market, visit our junk bonds category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of HYG, JNK.