ARE JUNK BONDS FORECASTING AN EQUITY CORRECTION?
Junk bonds have gone ballistic in the last week as investors pile into the risk trade. Junk bonds have gone nearly parabolic in recent days and could be forecasting sideways to down movement in the equity markets in the coming weeks. In the last 12 months we’ve seen4 different periods where junk bonds went near parabolic. Equity markets struggled to move higher following each major move. Hunter at Distressed Debt Investing has some interesting notes and thoughts on the recent move in junk: While I am having trouble finding an intra-day graph of the HY12 Index, I would like to point out to readers that that High Yield market has been NUTTY over the past 7-10 trading days. To give you context, 8 points is a MASSIVE move. Today, I walked into the office, and the market was up nearly 2 points. A few hours later it was up only 1/4 of a point and ended the day up 3/4 of a point. Over $2.5B of the HY indices traded today. Most traders and analysts get 1000s of Bloomberg runs a day. What I fin