Here is the same junk bond fund (JNK) from yesterday, but this time as a ratio of US Government Bonds in the IShares Barclays 20+ Year Treasury Bond Fund (TLT). A bullish three year inverse head and shoulders pattern or cup and handle formation (JNK is only 3 years old) has just broken out to the upside. This might indicate that high yield junk bonds will significantly outperform Treasuries for the next year. Remember, this chart is just a ratio, so of course both types of bonds could crater, but if that were to happen, odds are that those investors holding US Debt Obligations would take a much worse beating. |
“We are all agreed that your theory is crazy. The question which divides us is whether it is crazy enough to have a chance of being correct. My own feeling is that it is not crazy enough.” ― Niels Bohr
Click on any chart to engorge it
Click on any chart to engorge it