ETF Based Bond Trend Indicators For The Week of November 22
11/23/2010 0 comments
Fixed income indices provide important insight into debt market conditions that are key to asset allocation strategies. We track detailed weekly bond trend movements. We use ETFs that represent the bond classes.
Last week, we noted that practically all bond assets other than short term credit and treasury bills had dramatic drop. This week, drops continue but at a much lower level. This continues to flag that there remains an appetite for risk based assets.
|
Description |
Symbol |
22-Nov Trend Score |
Direction |
15-Nov Trend Score |
|
High Yield |
(JNK) |
6% |
^ |
5% |
|
International Inflation Protected |
(WIP) |
4% |
v |
4% |
|
Emerging Mkt Bonds |
(PCY) |
4% |
v |
5% |
|
Long Term Credit |
(LQD) |
3% |
v |
3% |
|
Intermediate Treasury |
(IEF) |
2% |
v |
3% |
|
Intermediate Term Credit |
(CIU) |
2% |
v |
3% |
|
International Treasury |
(BWX) |
2% |
v |
3% |
|
Inflation Protected |
(TIP) |
2% |
v |
2% |
|
MBS Bond |
(MBB) |
2% |
^ |
1% |
|
10-20Year Treasury |
(TLH) |
1% |
v |
2% |
|
Short Term Credit |
(CSJ) |
1% |
^ |
1% |
|
US Total Bond |
(BND) |
1% |
v |
1% |
|
Short Term Treasury |
(SHY) |
0% |
v |
0% |
|
Treasury Bills |
(SHV) |
0% |
^ |
0% |
|
20+ Year Treasury |
(TLT) |
-1% |
v |
-1% |
|
National Muni |
(MUB) |
-2% |
v |
-1% |
|
New York Muni |
(NYF) |
-2% |
v |
0% |
|
California Muni |
(CMF) |
-3% |
v |
-1% |
Top Five Indicators
click to enlarge
High yield bonds having an upward trend supports the appetite for more risk based assets.
LQD is one to watch to see whether it continues its upward trend and PCY to see whether Emerging market debt turns positive as an emerging market.
Bottom Five Indicators
As the Federal Reserve kicked off a program (QE2) to buy $600 billion in government debt within the next eight months, we have seen a flattening yield curve - a sharp drop in the prices of short-term government bonds and declining yields for the long maturity government bonds. This indicates that the demand for short term safe-haven U.S. government bonds also receded as concern over the solvency of Ireland’s banking system eased.
The renewed concern over state and local government finances has also driven up the yields on Munis. Investors are waiting for a stronger message coming out from the municipalities on how they will balance their budgets and avoid a potential default.
In conclusion, the long maturity government bonds have found a comfort level in the market as the Fed came out and strongly committed to the QE2 program, but the uncertainties over Ireland’s finances and China’s possible rate hike will continue to have an effect on the volatilities in the fixed income markets.
labels:investment,
Symbols:AGG,BND,BWX,CIU,CMF,CSJ,EMB,HYG,IEF,JNK,LQD,MBB,MUB,NYF,PCY,PHB,SHV,SHY,TIP,TLH,TLT,WIP,
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