This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Global Macro: Junk Bonds Move Lower

NEW YORK ( TheStreet) -- Declining junk bond prices indicate that investor sentiment may be rolling over to the downside.

The chart below of iShares iBoxx $ High Yield Corporate Bond (HYG) shows that junk bonds reached yearly highs in late October and have since begun to fall lower, which is significant because equities and high yielding credit tend to be correlated.
[Read: <a target="blank" data-add-tracking="true" href=""><em>Everyone Declares Victory After US Airways/AMR Merger Approval</em></a>]

Similar to emerging markets, analyzed in yesterday's article, assets hurt by rising interest rates have started to move lower, while equity U.S. equity markets have remained resilient.

The movement lower by junk bonds indicates the Federal Reserve may reduce its bond purchases sooner than expected. Fed members have been on both sides of the fence when discussing their December policy meeting publicly. Some officials see more aggressive stimulus as a must, while others are reminding markets that stimulus is not infinite.
[Read: <a target="blank" data-add-tracking="true" href=""><em>Junked Out: How the Big Three Rating Agencies Lost Their Mojo</em></a>]

With uncertainty over future policy and assets trading at relatively overbought levels, the safe trade has been to sell. Equities were volatile on Tuesday, and continued pressure in correlated markets could be the catalyst for equity indices turning lower by year's end.
[Read: <a target="blank" data-add-tracking="true" href=""><em>7 Worst Ways to End an Office Romance</em></a>]

At the time of publication, the author had no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Andrew Sachais' focus is on analyzing markets with global macro-based strategies. Sachais is a chief investment strategist and portfolio manager at the start-up fund, Satch Kapital Investments. The fund uses ETF's traded on the U.S. stock market to gain exposure to both domestic and foreign assets. His strategy takes into consideration global equity, commodity, currency and debt markets. Sachais is a graduate of Georgetown University, where he earned a degree in Economics.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
HYG $76.13 -1.70%
AAPL $94.99 1.00%
FB $99.47 -4.40%
GOOG $683.91 0.05%
TSLA $149.27 -8.20%


Chart of I:DJI
DOW 15,907.99 -119.06 -0.74%
S&P 500 1,853.44 -26.61 -1.42%
NASDAQ 4,283.7530 -79.3910 -1.82%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs