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Are Investment Grade Bonds About to Rally?

Published 07/12/2022, 19:05
Updated 09/07/2023, 11:31

Considering our national debt and the debts of companies and consumers, it’s evident that the bond market is critical to our economy.

This is likely why the iShares iBoxx Investment Grade Corporate Bond ETF (NYSE:LQD) started to sputter last year, well before the bear market in stocks this year.

You can see the turn lower on today’s chart, a long-term monthly chart of LQD. This downturn also hinted at the economic slowdown we are seeing.LQD Monthly Chart

So, is it a good or bad time to sell bonds?

As November was coming to an end, the Investment Grade Bonds ETF (LQD) recorded the largest one-day outflows in its history at (1). Could this be a contrarian indicator of a bottom?

It’s worth noting that LQD recorded one of its lowest RSI (Relative Strength Index) readings in the history and is turning higher after testing its 61% Fibonacci retracement level at (2).

Will these historic readings/indicators lead to a broader rally in investment-grade corporate bonds? Stay tuned.

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