US High Yield Corporate Bond returns have reached the ‘stretched optimism’ zone, according to our Sentiment Barometer Indicator. The shift in investor sentiment is also seen in HYG ETF flows & put/call ratio.
Three HY market developments that question bullish sentiment: breadth not matching price action; lack of CCC participation; HY excess returns lagging behind Investment Grade over past 2 weeks.
Bund yields have fallen close to 200d MA, with SBI around neutral 50 level which hasn’t been breached for any length of time in nearly 2 years. UST 30Y-2Y slope hit -35bp level flagged 6 weeks ago as entry point for steepener.
ASR clients can read this report in full: HERE
If you are not already a client and are interested in a free trial of our award-winning research, please see: HERE