Junk Bonds, Transports, and the Yield Curve

Right now there appear to be three main sources of concern for bulls: high-yield bonds, the Transports, and the slope of the yield curve. Let’s examine each of these individually to see if they warrant a change in our longer-term outlook.
First up is junk bonds. Last week was the first time in eight weeks that major indexes posted losses, and that weakness may have been presaged by declines in junk bonds, as seen below.

Junk bonds are highly correlated with equities and tend to be one of the first areas investors look to sell when they want to raise cash. The price action in this daily chart certainly looks ominous, but if we zoom out to a longer-term perspective, we can see that no major technical damage has been done.

This post was published at FinancialSense on 11/14/2017.