Stock Ticker Symbol - HYG

The ratio of high yield "junk" bonds to government treasuries (HYG / LQD) is painting a picture of "Go" conditions for HYG. What's more, HYG has outperformed the market over the past year. Let's explore how the RSI has moved in recent weeks. I'll also discuss why HYG is a great pick at the moment.

HYG / LQD weekly chart

The HYG / LQD weekly technical analysis is a great tool for detecting changes in stock prices. The ratio between HYG and LQD reveals whether the price of a particular stock or bond is too expensive compared to its market capitalization. As the ratio approaches zero, it signals a high likelihood of a price decline. However, this scenario is not all that uncommon as stock prices can rise or fall in a wide variety of ways. In this article, we will be looking at some of the major factors that drive these ratios.

High yield corporate bonds have not made any progress during their last week, and the declining volume painted a picture of short-term consolidation, which goes along with a lack of bear reassertion. However, investment grade corporate bonds negate the hesitation of the HYG ETF by rising higher above LQD. This could be a sign of renewed upward movement for HYG and LQD.

The HYG / LQD weekly technical analysis suggests a continuation of the slow and steady grind higher. The market is forming sideways consolidation and is unlikely to experience a large correction anytime soon. The outlook for the coming days and weeks is bright. The next step is to see how the markets react to the Covid vaccine rollout. We'll also look at what happens to the VIX, which has been spiking over the past few days.

HYG / LQD weekly perspective on HYG / LQD ratio of high yield "junk" bonds to government treasuries is painting "Go" conditions

The HYG / LQD ratio (high yield "junk" bonds to government tradable securities) is near an all-time low. As the yields on these securities approach record lows, they are increasingly attractive to investors. With yields on 10-year Treasury notes approaching 0.59%, demand for new issuance of these bonds is sky high.

On Tuesday, U.S. stocks rose modestly, as investor confidence improved. However, money managers rushed to make portfolio adjustments as they sought to touch up positions before the end of the third quarter. The Standard & Poor's 500 index slipped nine points to 1447, while the Nasdaq Composite lost 29 points to 3131. Meanwhile, the Federal Reserve's new mortgage bond buying program is not expected to spur economic growth, which is a key policy objective of the central bank.

Another interesting statistic is the HYG / LQD ratio between high yield "junk" bonds and government treasuries. This ratio has only reached its extreme low level six times in the last twelve years, but when this ratio hits an extreme low, it may be painting "Go" conditions. In fact, historical fail-safe withdrawal rates from these two assets have been much higher than in the past. As a result, HYG / LQD ratio of high yield "junk" bonds to government treasuries is painting "Go" conditions, but the next few weeks will tell us if the current trend is continuing.

HYG has outperformed the market in the last year

If you're looking for a way to invest in credit without risk, HYG may be the right option for you. The high-yield bond fund has outperformed the market in the last year and is a top pick among long-term investors. HYG has outperformed the market in the last year and has a low beta, which means it's highly liquid.

Traders deploy the most liquid instrument when investing. While HYG and JNK are similar funds that follow the same market-cap-weighted index for high-yield corporate debt, HYG holds more bonds. In fact, 18 of HYG's top 20 holdings are identical to those of JNK. Both funds are heavily concentrated in the high-yield corporate debt sector, and each has a lower cost structure than most peers.

Another high-yield bond fund that has outperformed the market over the past year is iShares iBoxx $ High Yield Corporate Bond Fund. HYG is an index fund that holds 601 issues, most of which are U.S. issues. Double-digit sector allocations are given to financials, energy, and industrials. HYG is a top pick in the sector and has outperformed both the market and ETFs in the past year.