The lower yield premium or flattening yield curve may be a warning sign of slower growth and inflation ahead. The premium has fallen negative prior to a recession before during the summer of 2007 and December 2000.
Bond ETFs’ “negative correlations with stocks don’t necessarily mean they can’t be logically held in the same portfolio as an S&P 500 tracking product like the SPY. Rather, holding the ETFs alongside stocks may grant diversification benefits, insofar as they reduce potential downside more than they cut into potential upside,” adds CNBC.
Want more Bond ETF news and analysis? Visit www.etftrends.com/bonds
Vanguard Extended Duration Treasury ETF
Tom Lydon’s clients own shares of TLT.