“When yields started moving higher back in 2000 & 2007 (upper left chart), junk bonds and the S&P 500 turned soft. From 2011 to a few months ago, yields continued to fall, which is often a good message for stocks. Are Junk Bond ETF’s sending an early cautionary message to the stock market? I DO NOT believe that investors should adjust portfolios solely upon the action of junk bonds,” adds Kimble.
HYG & JNK Charts
Charts Courtesy: Kimble Charting Solutions
Tom Lydon’s clients own shares of HYG and JNK.