Monitoring Junk Bond ETF Technicals

The iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG) and the SPDR Barclays High Yield Bond ETF (NYSEArca: JNK), the two largest high-yield corporate bond exchange traded funds by assets, and rival junk bond ETFs are rebounding this year as investors remain thirsty for yield.

The emergence of negative bond yields across much of continental Europe and Japan has triggered a global migration of investors into the U.S. market where yields are more attractive.

For instance, yields on benchmark 10-year Germany bunds were at 0.02% and yields on 10-year Japanese Government Bonds hovered around -0.17%, whereas 10-year Treasuries showed a 1.64% yield. Meanwhile, yields have dipped to 5.04% for speculative-grade BB-rated U.S. companies.


Last year, high-yield corporate bond exchange traded funds were controversial ideas. With oil prices tumbling and the Federal Reserve appearing as though it was on course for multiple interest rate hikes in 2016, ETFs such as HYG and JNK were punished by investors.

That situation has reversed in significant fashion this year. Rebounding oil prices and diminishing chances of multiple interest rate hikes are encouraging investors to revisit junk bond ETFs, including HYG and JNK. HYG and JNK are the two largest high-yield corporate bond ETFs by assets.

Related: Wall Street Eyes Junk Bond ETF for Easy Liquidity