Even though equity markets have pulled back since the June 12th top, investment grade corporate bonds have continued to perform well. Below is a year-to-date price chart of LQD, which is an ETF that tracks the investment grade corporate bond market. Since bottoming in early March, the ETF has been in a very strong uptrend, bouncing off of the bottom and top of an upward sloping channel as it has worked its way higher. While the S&P 500 is off more than 7% from its recent high, LQD is on the verge of breaking out to a six-month high.
I would be surprised if they continue to hold up well in a down market. According to my timing model risk aversion is coming back. Be careful as I believe there will be a movement from investment grade to long term treasuries.
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Posted by: goldstocktrades.com | July 12, 2009 at 03:57 PM
This thing's YTD yield is 1.28%...
Posted by: Jimbo | July 13, 2009 at 08:12 PM