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Are Junk Bonds Sending Bearish Message to Stock Market?

Published 03/10/2023, 20:10
Updated 09/07/2023, 11:31
JNK
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There are several indicators to watch when assessing risk across the financial markets, and today we discuss one of the more important ones.

JNK Bonds ETF-Weekly Chart

Junk bonds.

When junk bonds are performing well and in demand, that is a sign of “risk-on”. But when they are underperforming, that is a sign of “risk-off”. And the latter applies to today’s marketplace.

Above is a chart of the Junk Bonds ETF (NYSE:JNK). As you can see, a year-long narrowing pennant pattern formed and appears to be breaking down.

In the past, junk bond weakness has been followed by stock weakness; will it be different this time? 

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