High Yield corporate bonds are breaking down relative to long dated govt bonds. It appears the break down of this 6 yr wedge help accelerate the losses in HYG during last week while helping TLT add to its gains. The bottom trend line of the wedge has been an important support line for this ratio over past several years. With this break down, it seems possible for the ratio revisit the lows seen in both 2011 and possibly 2008. Most likely through more losses in HYG and more gains in TLT.
If S&P 500 is going to find a tradeable low heading into the end of the year, it would seem that this ratio will need to stabilize. As can be seen in this chart, any important previous low made by the S&P500 has also seen a corresponding low in this ratio.
If S&P 500 is going to find a tradeable low heading into the end of the year, it would seem that this ratio will need to stabilize. As can be seen in this chart, any important previous low made by the S&P500 has also seen a corresponding low in this ratio.
