Yields Up, Dollar Up, Junk Bonds Tumble

April 1, 2024

Mish's Daily

By Mish Schneider


As we start a new month, quarter, and week, I want to remind you how I concluded the weekend Daily:

“Narratives are not very meaningful if price says something different. We have seen narratives change on a dime as price rules.”

Perhaps it is because of April Fools, but after a stellar ending of Q1, the session today began and ended with yields higher, the dollar stronger and junk bonds (HYG) weaker.

We often write about junk bonds as a barometer for risk on/off.

The reasons are simple.

In a risk on environment, investors have an appetite for buying companies with a lot of debt or poor balance sheets yet pay bigger dividends.

We also use HYG and its relationship to long bonds to calculate one part of our Big View risk parameters.

Is the narrative changing to more risk off?

Let’s look at the chart.

On the Daily, HYG stopped right at the January 5-month Calendar Range high (green horizontal line).

Although the price has been below the 50-DMA already (blue), today it broke it cleanly once again with a significant gap down lower.

77.00 is huge support and bulls want to see that level hold.

The ration between junk bonds and long bonds remains intact for risk on.

However, it does so marginally.

The momentum on HYG started to show a bearish divergence last week even as the market was making new highs.

It would be wise to watch how HYG does this week.

In the past, a break of support and a deterioration of its outperformance to long bonds have been warning signs, well ahead of a bigger market correction.


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Mish in the Media - All clips here

Stockpick.app Mish takes you through retail, gold miners, DJT and Netflix 04-01-24

Business First AM Mish tells you why she likes gold miners and feels they could run more 03-28-24

Stockpick.app Mish covers why being a bull makes sense and yet, what signs we should keep our attention to 03-25-24

Business First AM Market strong, quants long and DJT new issue 03-25-24

CNA Asia First Where will money rotate after the FOMC-Mish talks to Singapore 03-20-24

The Morning Run BFM 89.9 Malaysia Business radio What’s next for interest rates, Fed policy and why we need to watch long bonds 03-20-24

Business First AM Mish checks the charts on commodity prices 03-20-24

CMC Markets Ahead of FOMC-here’s a tutorial on how to trade the dollar/yen, gold, oil, silver and natural gas 03-20-24

Schwab with Nicole Petallides -Mish covers her predictions and why solar should be watched along with commodities and long bonds 03-15-24

Real Vision Daily Briefing Mish goes through all the factors to watch for the stocks and commodities next big moves 03-18-24

Stockpick.app Mish schools viewers-clear and concise guide to the signs we are keeping our eyes on this week and why 03-19-24

Financial Sense Jim Pupluva Mish and Jim talk about the signs of inflation and recession-both are still on the table 03-15-24

Money Show with Mike Larson Listen as Mish’s predictions all come true from February in Las Vegas 03-14-24

Business First AM Identifying Warning Signs and why Alibaba 03-13-24


Coming Up:

April 2 CNBC Worldwide Exchange

April 2 Fox Business with Charles Payne

April 3 Final Bar Stockcharts TV

April 9 Wealth365

Weekly: Business First AM, CMC Markets, and new to us-stockpick.app


ETF Summary

S&P 500 (SPY) 520 pivotal

Russell 2000 (IWM) 212 next resistance 208 support

Dow (DIA) 385 support 400 resistance

Nasdaq (QQQ) 440 the pivotal area

Regional banks (KRE) 45-50 range

Semiconductors (SMH) 223 support near term

Transportation (IYT) 68 area support

Biotechnology (IBB) 140-142 resistance 135 support

Retail (XRT) 77 now support

iShares iBoxx Hi Yd Cor Bond ETF (HYG) 77 big number to hold. Over 78 risk ON

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