ETF Based Bond Trend Indicators For The Week of November 15

11/15/2010 0 comments

Fixed income is a key asset class categories in portfolio building. The main risks are represented by  long/intermediate/short maturity bonds and high yield (junk), credit bonds. These indices provide important insight into debt market conditions that are key to asset allocation strategies. MyPlanIQ tracks detailed weekly bond trend movement. We use ETFs that represent the bond classes. For more information, please visit MyPlanIQ 360 Degree Market View.
 
The Federal Reserve's low rate policy has driven down bond yields to historical low. The Fed's QE2 announced last week showed Fed's committed action to maintain a long period of low rates to stimulate the economy. Investors should take a note on the 20+ year treasury bonds that has had trouble recently: reflecting a belief that eventually, Fed's action will result in much higher inflation. International fixed income bonds are rising because of the US dollar weakness. 

Description

Symbol

15-Nov Trend Score

Direction

8-Nov Trend Score

High Yield

JNK

5%

v

8%

Emerging Mkt Bonds

PCY

5%

v

9%

International Inflation Protected

WIP

4%

v

7%

Intermediate Treasury

IEF

3%

v

5%

International Treasury

BWX

3%

v

6%

Long Term Credit

LQD

3%

v

5%

Intermediate Term Credit

CIU

3%

v

4%

Inflation Protected

TIP

2%

v

4%

10-20Year Treasury

TLH

2%

v

4%

MBS Bond

MBB

1%

v

2%

US Total Bond

BND

1%

v

2%

Short Term Credit

CSJ

1%

v

1%

Short Term Treasury

SHY

0%

v

1%

Treasury Bills

SHV

0%

v

0%

New York Muni

NYF

0%

v

2%

20+ Year Treasury

TLT

-1%

v

1%

National Muni

MUB

-1%

v

2%

California Muni

CMF

-1%

v

1%

 

 
 


Top Five Indicators


There is weakness across the board without any indication of what is
 


Bottom Five Indicators


The worst performers are treasury bonds, especially in the 20+ year ones. Again, it is telling that investors definitely have a negative outlook in a long term for fixed income. Other bottom performers all have less risky nature, reflecting investors' chase for high yields and increasing risk appetite.


In conclusion, bonds in general continue to do well. Investors should keep an eye on such euphoria outlook and watch carefully on the possible turn that eventually will happen: exceptional low rates have to come with a price and can only sustain for so long. 

 

labels:investment,

Symbols:AGG,BND,SHV,SHY,IEF,TLH,TLT,TIP,WIP,HYG,JNK,PHB,CSJ,CIU,LQD,BWX,CMF,NYF,MUB,MBB,PCY,EMB,

 



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