“The Leaders Are Crashing” – It’s Not Just Junk Bonds That Have Given Up

Friday, November 10, 2017
By Paul Martin

by Tyler Durden
ZeroHedge.com
Nov 10, 2017

We have been warning about significant divergences between equity prices and other asset classes for a few weeks (most notably the decoupling from equity risk and credit risk, junk bonds), but as BofA notes its not just these assets that are breaking away from soaring Nasdaq levels, in fact many of the rally’s leaders are crashing… in a way we have not seen recently.

High yield risk has suddenly decoupled from equity markets…

And Jeffrey Gundlach has been warning something’s got to give. Based on the past two days, looks like we have our answer.

Stocks fell around the world a second day and high-yield bonds headed for a fourth straight loss, resuming a historic correlation that the hedge fund manager on Wednesday had warned was alarmingly out of whack.

“JNK ETF down six days in a row, closing near its seven month low,” the DoubleLine Capital LP co-founder wrote on Twitter Wednesday. “SPX up five of last six days, closing at an all time high. Which is right?”

In fact the correlation between these two leaders has crashed…

The Rest…HERE

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