High Yield Leads The Way

By Tim KnightBondsMar 21, 2021 01:11AM ET

www.investing.com/analysis/high-yield-leads-the-way-200568522

High Yield Leads The Way

By Tim Knight | Mar 21, 2021 01:11AM ET

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US500

+0.55%

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SPY

+0.56%

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HYG

+0.16%

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This is a look at two ETFs: the granddaddy of them all, SPDR® S&P 500 (NYSE:SPY) (the S&P 500) and the high-yield corporate fund symbol iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG). In normal markets, they pretty much mimic the behavior of the other. As you can see, for many years, they are joined at the hip.

Recently, however, a divergence has taken place which is well worth noting. The high yield corporate bonds have weakened. having peaked way back on February 8th while the SPY hit its own lifetime high a full five weeks later.

Take a closer look. The HYG (black line) has been making a series of lower highs while the SPY has steadfastly been marching higher and higher.

Historically, the HYG provides a heads-up about a shift in the direction of equities. I suspect this will be yet another instance of such a phenomenon.

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Jay West Mar 21, 2021 3:42PM ET

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Do you expect the same correlation with the NASDAQ 100 as well?

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Central Banks

Interest Rates

Next Meeting

FED

4.50%

Mar 19, 2025

ECB

2.65%

Apr 17, 2025

BOE

4.50%

Mar 20, 2025

SNB

0.50%

Mar 20, 2025

RBA

4.10%

Apr 01, 2025

BOC

3.00%

Mar 12, 2025

RBNZ

3.75%

Apr 09, 2025

BOJ

0.50%

Mar 19, 2025

CBR

21.00%

Mar 21, 2025

RBI

6.25%

Mar 10, 2025

PBOC

3.10%

BCB

13.25%

Mar 19, 2025

US 30	42,449.0	-352.5	-0.82%
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Dow Jones	42,801.72	+222.64	+0.52%
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U.S. 5Y	4.029	-0.065	-1.59%
U.S. 3M	4.317	+0.010	+0.23%
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High Yield Leads The Way

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