More on junk bonds.

Just saw this fun article over at Marketwatch.



Junk bonds are on the retreat!

Mutual funds and exchange traded funds that invest in high-yield bonds saw a total of $1.68 billion in redemptions in the week ended Wednesday.

And oldie but a goodie still, look at the over-valuation of junk-bonds up through April.


What's more interesting is The Barclays High Yield Bond index, which is tracked by the SPDR Barclays High Yield Bond ETF JNK -0.12% , has seen yields rise from a record low of 4.83% on June 20th to 5.17% on Wednesday

And...

The premium that junk bonds pay over comparable Treasury bonds rose to 3.52 percentage points from 3.24 percentage points during the same time period, according to Barclays.

So as short-term traders sell, the long-term traders are buying. The 10yr yield is approaching 2% while JUNK hovers around 5%! It's likely that as interest rates rise junk bonds won't be impacted as much as interest-rate sensitive securities.

If junk goes, stocks go.