Junk bond ETF HYG is going bearish. This is not good signaling or any sort of positive divergence for the stock market. It is a flat out negative one, as the speculation the Fed instigated in 2020 continues to wane. If situations like this do not reverse or stabilize soon there could well be a liquidity event in the offing.
I have been lightly speculating on the markets finding an interim low in and around here but this warns not to be too patient with that view. Junk vs. Treasury and Investment Grade bonds are also dropping but not yet broken. That’s the only reason I am being a little big patient. Typical FOMC week, but with the potential to degrade into something worse. All those months of writing about how high risk was for the cyclical risk ‘on’ markets… well, now that risk could be getting realized.
