Why you should care about junk bonds

David Frost // Market Outlook


June 9  

One of the best canary’s for the stock market is the high yield index or junk bonds.  As a proxy, you can look at the SPDR Barclays High Yield Bond ETF (JNK).

At first glance JNK doesn’t look like it’s down all that much.  A closer look will yield a different story.

The index made a high in May of 2013, a lower high in June of 2014 and hasn’t seen those prices since.  What this tells me is that there’s trouble lurking.

Keep in mind the junk bonds can be way ahead of stocks in terms of a predictor.

Something to watch for later, nonetheless.


About the Author

Trading and investing in markets is second nature to some, but a mystery to others. The goal is to provide a forum where everyday people aspiring to be part time or full time traders will learn how view markets differently and profit beyond their wildest dreams.

David Frost