Markets fell on Thursday.
The S&P 500 fell 0.4 percent, the STOXX Europe 600 fell 1.1 percent and the Nikkei 225 fell 0.2 percent.
The falls on Thursday were mostly attributed to uncertainty over US tax reforms but some analysts are concerned that a leading indicator for stocks is breaking down.
Matt Maley, equity strategist at Miller Tabak, noted that the iShares high-yield corporate bond exchange-traded fund has fallen below its 200-day moving average over the past week, and “this raises some concerns in my mind”.
The SPDR Bloomberg Barclays High Yield Bond ETF also fell below its 200-day moving average early this month, confirming a divergence between junk bonds and stocks, which had been rallying.
Marty Fridson, CIO at Lehmann Livian Fridson Advisors, said: “Can you have a little bit of a correction here just because things have gotten super tight? Yes.”
Still, Fridson said economic fundamentals remain fairly solid and does not expect a major decline for stocks.
Similarly, Maley did not think that the fall in junk bonds signify a major problem for stocks just yet but said he would be watching for further signs of weakness.
No comments:
Post a Comment