Where to go: Treasuries or Junk?
- Posted by JC Parets
- on January 16th, 2013
This is the question that we like to ask ourselves when we look at the US Bond market. Would we prefer to be heavier on the government debt side or higher yielding corporate bonds (“Junk”)? Logic would probably tell us to be in the junk while rates keep heading higher. And that strategy has actually been working nicely for some time now.
But what do we do from here? – that’s the question. This is a chart of the iShares High Yield Corporate Bond ETF relative to the iShares 20+ Year Treasury ETF. As we can see, the 50% retracement from the 2011 decline has been trouble for over a year.
So I would be watching this 80 area closely on the spread as Treasury Bond prices continue to come off. I think it would be healthy to see a little bit more consolidation before breaking out, but as always, the more times a level is tested, the higher the likelihood that it breaks. And this looks like test #4 on my count.
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He is a 10-year veteran and Market Technician who actively manages money incorporating Technical Analysis and Behavioral Finance into his practice. JC’s work has been featured regularly on CNBC, Fox Business, Bloomberg, Business News Network, Wall Street Journal and Yahoo Finance among many other financial media outlets. More...
- Canadian Dollars Are About To Explode Higher
- Gold Looks Ready For Its Next Leg Lower
- Video: Technical Analysis Webinar by JC Parets
- Is Yen Setting Up For An Epic Rally?
- Emerging Markets Are Still A Problem
- Find Your Edge: The Autumn 2015 AlphaShark Trading Symposium with a Presentation by J.C. Parets
- Can Financials Correct 30% From Their Highs?
- Overhead Supply in the Dow Components
- Overhead Supply in Healthcare & Biotech
- Thinking Out Loud Heading Into Q4
Archive by Year