USD High Yield ETF Model Portfolio 1st Quarter 2019 (Update)
Observe the inversion:
Yield relationship between JNK and SJNK have reversed. Short corporate junk bonds have moved cheaper than longer duration junk bonds (Canary in the coal mine? Did very risky junk evident itself on the short end? Prices for junk bonds move too high?)
In any case, this signals to me that the initial 40% model allocation in JNK needs to be reconsidered
Selecting to move allocation either shorter into SJNK or municipal high yield seems warranted given the yield compression seen in JNK
Short term high yield municipal bonds continue to be rich relative to other options
USD High Yield ETF Model Portfolio Allocations for 1st Quarter 2019 (Updated)
Data as February 19, 2019.
Sources: State Street Global Advisors and VanEck. TEY = Taxable Equivalent Yield and assumes a 37% Federal tax rate. 1. Yield averages calculated using Taxable Equivalent Yields and are used for illustrative purposes only.
For Reference: Year-to-date Index Yield Change (Bps)
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