the Yuppie Pig

It's interesting to see how the stock market has moved with the bond market; particularly the high yield, corporate bonds given the credit crisis we've just been through. One of the reasons I think we will not re-test the lows is that the credit conditions are actually much better. Corporate bond have rallied substantially giving companies a chance to re-capitalize.


We can see that both bottomed at the same time, and the high yield corporate bonds have been off to the races along with the market since. Only in the past few days has it shown any weakness, but is still within the uptrend.


If a correction plays out in the market and the SPX pulls back, then we should also see a confirming move in the HYG. This hasn't happened yet, but something to look for.