A bearish indicator?

This chart shows the ratio of TLT (Treasury bonds ETF) and JNK (High-yield bonds ETF) (dashed line). When the ratio rises TLT is stronger than JNK. It means investors prefer Treasuries to high-yield bonds. (Click on the chart to enlarge it). 

Translation - investors see risk rising and this is a bearish trend for equities (solid line).

When the ratio declines, investors see risk declining and prefer JNK to TLT. The decline in the ratio is bullish for equities because of lower financial risk.

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George Dagnino, PhD

Editor
The Peter Dag Portfolio
Since 1977

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