Could High Yield Corporate Bonds be acting like the proverbial canary in the coal mine?
This may be an important question to ponder for anyone who may have recently been thinking they wanted to get a little friskier with their stock market portfolio. As you most likely know, the equity markets measured by the S&P 500 have been making new record highs over the past few months. What you may not know is that the High Yield Corporate Bond market measured by proxies such as JNK and HYG not only remain far below their peak values in 2007 but they are also well below their post crisis highs of 2014.
The reason this may be noteworthy is that the corporate bond market is a huge market and is representative of the higher risk credit instruments and it tends to be the place that institutional investors will play when they are looking to add risk and return to their portfolio. History has shown when equity markets make new highs without their high yield brethren that the equity euphoria can be short lived. With that in mind, I’ll let these charts do the rest of the talking.
The opinions expressed are those of Colby McFadden and Quiver Financial as of March 14, 2017 and are subject to change due to market or other conditions. This is not a solicitation or recommendation of any investment; always consult a Financial Advisor before investing into any investment. Securities offered through WestPark Capital, Inc. - Member FINRA / SIPC / http://brokercheck.finra.org Advisory Services Offered through WestPark Capital, Inc. 18872 MacArthur, 1st Floor, Irvine, CA 92612 - 949.590.4200