Oil hitting high yield bonds

HYG OILIn today’s StockCharts.com commentary, Arthur Hill sheds some light on what’s plaguing high yield bond ETFs lately: sinking oil prices. He points out that iShares iBoxx $ High Yield Corporate Bond (HYG) and SPDR Barclays High Yield Bond (JNK), the two biggest players in the high yield bond ETF business with a combined $23 billion in assets, each have large stakes in the energy sector. And with oil prices in a free-fall, HYG and JNK are feeling the impact. Note the strong correlation in my chart of HYG (without dividends) and crude oil – click to enlarge. Both topped out in June and have been declining together.

My newsletter’s timing model for US High Yield Bond Funds generated a sell signal on September 15, quickly reversing an August 29 buy signal.

 ♦ Please note that my readings will change without notice,  so please don’t buy or sell solely based on anything you read in this blog. ♦

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