By Tyler Durden
Authored by Kevin Muir via The Macro Tourist blog,
If you are looking for some breathless post about the recent collapse of the junk and high-yield market over the past couple of weeks, then click somewhere else.
I know it makes for exciting writing, but I won’t do it. There is already more than enough hyperbolic rhetoric filling the financial airwaves.
But the really amusing part? Have any of these doomdayers actually had a look at the return of these bond markets over the past year?
I hate to use ETFs to generalize an asset class’ returns, but the HYG and JNK ETFs seem to be on everyone’s lips as the epicenter of the recent terrible high yield “rout.” Heck, even newly crowned Bond King Jeffrey Gundlach watches JNK technicals for clues.
Let’s have a look at these awful “technicals” for HYG and JNK.
Yup. I can see why pundits are talking about the decline. It sure looks scary.
But is it? Both ETFs are bond funds – which means they pay interest as dividends. When examining the return of these assets, it is important to include these “interest payments” in the calculation.
What does it look like if we put …read more