However, nothing is certain and that is the same for yield curves. While a recession signal may be looming, it doesn’t portend to a forthcoming recession in all instances.
“It doesn’t mean you will have a recession. It does not bring about recession,” Cabana said. “But it clearly shows there’s more demand on the long end. It’s a harbinger of elevated recession risks.”
Bond Exposure Still a Must
Given the latest market volatility, getting that bond exposure is still a must. Investors looking to gain broad-based exposure to bonds can look at funds like the ProShares S&P 500 Bond ETF (NYSEArca: SPXB). The fund seeks investment results that track the performance of the S&P 500®/MarketAxess Investment Grade Corporate Bond Index, which consists exclusively of investment grade bonds issued by companies in the S&P 500.
Investment-grade corporate bond-focused fixed-income ETF options include the iShares Intermediate Credit Bond ETF (NASDAQ: CIU), iShares iBoxx $ Invmt Grade Corp Bd ETF (NYSEArca: LQD) and Vanguard Interm-Term Corp Bd ETF (NASDAQ: VCIT). Investors looking for broad-based core bond exposure can look to a fund like the iShares Core US Aggregate Bond ETF (NYSEArca: AGG).
For more market trends, visit ETF Trends and to access up-to-date data on ETFs, visit ETFdb.com.