BIL - High Yield Bonds Hit All-Time Total Return Highs Weak HYG Risk/Reward
2024-03-18 13:32:18 ET
Summary
- Treasury volatility has eased, but varying Treasury and credit returns persist, with only T-bills and junk bonds at total return all-time highs.
- I have a hold rating on iShares iBoxx $ High Yield Corporate Bond ETF, as credit spreads are historically tight and the HYG fund's YTW has come in significantly.
- With global defaults on the rise, HYG's fundamental risk/reward setup does not look ideal, though its technical chart is favorable.
What a wild few years it has been in the fixed-income markets. The Fed began its rate-hiking campaign about this time in 2022 – a period of rising equity market volatility, surging crude oil prices, and a strengthening dollar. Today, Treasury volatility has eased, with the ICE BofA MOVE Index not far from 52-week lows while the VIX is subdued near 15. ...
High Yield Bonds Hit All-Time Total Return Highs, Weak HYG Risk/Reward