$TLT/$HYG Ratio Poised for All-time Highs?


Flight to safety remains long term trend

One of my favorite charts is the ratio of the 20-Year Bond ETF, $TLT, to the High Yield Corporate Bond ETF, $HYG. The chart communicates investor risk appetite between low risk, lower yielding US bonds and high risk, higher yielding corporate bonds.

I find it noteworthy that the chart has remained in a consistent upward trending channel since 2008, with only the Global Financial Crisis serving as the outlier. The pattern has produced a series of higher lows and higher highs since 2011, with the recent breakout in May serving as a potential catalyst for a move to new all-time highs, eclipsing the 2008 ratio. If the trend continues, it would indicate a backdrop of waning investor confidence and heightened fear driving the markets.

Charts Above Made Using TradingView

About the author

I am the founder of fibonacci.com and an avid trader. I am also the co-founder of Texas Precious Metals, a top US precious metals company. In 2006 I was a contestant on The Apprentice with future president, Donald Trump. I live in Coeur D'Alene, Idaho, with my wife and six children, where I spend my time hiking, charting, and changing diapers.

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