US stock markets have been declining for three weeks in a row, but so far the financial markets have not particularly noticed this.
For example, the S&P 500 broad market index fell 8.5% from its all-time highs, while the US high-yield bond market felt it only yesterday, and then only slightly.
The index of high-risk bonds – in other words, “junk”, fell during the session on Monday by 875 points or 1.9%, but since the beginning of September, the drawdown was only 3.8%. That is, until market participants consider the current decline to be something serious.
US High Yield Bond Index
For comparison, the collapse at the end of February The High Risk Bond Index confirmed almost instantly. Now, in turn, the situation is similar to the summer correction in American stocks.
At the same time, the S&P 500 index approached an important support line around 3250 points, where it was caught yesterday.
Large market participants, playing bullish, will try to keep the markets at current levels, otherwise the correction may intensify and then real sales will begin, which may force the financial authorities to act. In this case, the Fed can re-launch the “printing press” in full, because if it is late, then a lot will have to be poured into the system.
Thus, the coming days will be extremely important for the markets, if they fail to be redeemed, a collapse could occur.
- High Risk Bond Index
- Spreads between junk and US government bonds