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
