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Bond ETF Analysis Archive

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Bond ETF Analysis: 12 March 2014

Government bonds now range-trading, corporates consolidate to breakout levels...

Market Overview

Since the beginning of the year, government bond funds generally recovered having found medium term support levels in December and have formed short term bases. We now note that the US 20+ Years (TLT) ETF encounters resistance from its recent highs at 109 and may go on to trade a short term range over the coming weeks. We also show the Int'l Inflation Protected (WIP) ETF developing a short term base above support, but note that it remains within its trading range of 56-64.

Corporate bond funds broke to new highs this year, but have recently settled back towards breakout levels. We show two of the more well-known US corporate bond ETFs, the US Investment Grade (LQD) and the US High Yield (HYG), as they both consolidate back to their breakout support levels.

In the emerging markets, we note that while the Local EM Bond (ELD) ETF has made a small recovery since the beginning of the year, it now encounters its prior downtrend. As for the USD EM Bond (EMB) ETF, we find it forming a short term base above support, but also note potential resistance at previous highs.

Outlook

Over the coming weeks, we anticipate that government bond funds will remain within their short term trading ranges. We also watch corporate bond funds at their current levels and whether they hold on to recent gains above breakout support levels.

Trend Summary (sorted by trend score)

Government

Trend Score

 

Corporate

Trend Score

 

Emerging Markets

Trend Score

SHY

 US 1-3yrs

71

 

JNK

 US High Yield BarCap

79

 

PCY

 EM Sovereign Debt

-11

IBGX

 Euro Govt 3-5

57

 

HYG

 US High Yield

79

 

EMB

 EM Bonds in USD (EMB)

-11

IBGS

 Euro Govt 1-3

14

 

IEAG

 Euro Aggregate Bond

77

 

ALD

 EM Asia Local

-43

MUB

 US Muni Bond S&P

9

 

IBCX

 Euro Corporate Bond

77

 

ELD

 EM Bonds (Local)

-83

IEF

 US 7-10yrs

-1

 

IHYG

 Euro High Yield

65

 

 

 

 

IGLT

 UK Gilt All

-1

 

LQD

 US Investment Grade

9

 

 

 

 

TIP

 US TIPS

-11

 

AGG

 US Aggregate Bond

1

 

 

 

 

WIP

 Int. Inflation Protected

-15

 

PFF

 US Preferred Stock S&P

1

 

 

 

 

TLT

 US 20+yrs

-23

 

MBB

 US MBS Bond Fund

-1

 

 

 

 

Bond ETF Highlights

Government

  • US 20+ Years (TLT)
  • International Inflation Protected (WIP)

Corporate

  • US Investment Grade (LQD)
  • US High Yield (HYG)

Emerging Market

  • EM Bonds Local (ELD)
  • EM Bonds in USD (EMB)
Bond ETF Statistics
 

Name

Last Price

Last Dividend

Last Div. Date

Div. Frequency

Est. Yield (%)

Government

         

SHY

 US 1-3yrs

84.55

0.018

07/03/2014

Monthly

0.26

IEF

 US 7-10yrs

102.13

0.166

07/03/2014

Monthly

1.95

TLT

 US 20+yrs

107.62

0.263

07/03/2014

Monthly

2.94

TIP

 US TIPS

112.65

N/A

N/A

Monthly

N/A

MUB

 US Muni Bond S&P

106.78

0.271

07/03/2014

Monthly

3.04

WIP

 Int. Inflation Protected

59.44

0.080

11/03/2014

Monthly

1.61

IGLT

 UK Gilt All

11.37

0.120

13/11/2013

Semi-Annual

2.11

IBGS

 Euro Govt 1-3

116.92

0.900

19/03/2014

Semi-Annual

1.54

IBGX

 Euro Govt 3-5

132.69

1.203

13/11/2013

Semi-Annual

1.81

Corporate

         

LQD

 US Investment Grade

116.59

0.346

07/03/2014

Monthly

3.56

HYG

 US High Yield

94.55

0.463

07/03/2014

Monthly

5.88

JNK

 US High Yield BarCap

41.32

0.202

11/03/2014

Monthly

5.86

MBB

 US MBS Bond Fund

106.27

0.156

07/03/2014

Monthly

1.76

AGG

 US Aggregate Bond

108.01

0.200

07/03/2014

Monthly

2.22

PFF

 US Preferred Stock S&P

38.37

0.220

07/03/2014

Monthly

6.87

IEAG

 Euro Investment Grade

113.67

1.250

08/01/2014

Semi-Annual

2.20

IHYG

 Euro High Yield

108.85

2.948

19/03/2014

Semi-Annual

5.42

IBCX

 Euro Corporate Bond

129.17

0.745

19/03/2014

Quarterly

2.31

Emerging Markets

         

EMB

 EM Bonds (USD)

107.39

0.405

02/01/2014

Monthly

4.53

ELD

 EM Bonds (Local)

45.97

0.170

31/12/2013

Monthly

4.44

ALD

 EM Asia Local

47.82

0.060

31/12/2013

Monthly

1.51

PCY

 EM Sovereign Debt

26.75

0.104

29/11/2013

Monthly

4.65

Government

 

The US 20+ Years (TLT) ETF rallied above support at 102 to form a short term base, but encounters resistance at recent highs at the 109 level, below further resistance at 110. It now gives way to a range-trading environment (short term range of 102-109).

 

 

Against the stock market, the TLT remains within its relative downtrend but has found medium term support at the 2007 lows and may now be forming a base.

 

 

The International Inflation Protected (WIP) ETF develops a short term base above medium term support at 56 as it has posted a higher low at the beginning of February. However, resistance remains at the previous highs at 64, so we expect further range-trading of 56-64 over the coming weeks.

We also note the WIP finding uptrend support against the TLT, as shown in the lower chart.

 

 

 

Corporate

 

The US Investment Grade (LQD) ETF broke previous resistance (now support) at 116 to make new short term highs. It now consolidates back to this level, and we watch for a potential reassertion of its uptrend.

In its performance against the TLT (lower chart), we find that the LQD may now be testing its short term top gainst the TLT, as shown in the lower chart.

 

 

The US High Yield (HYG) ETF also broke to new short term highs above previous resistance (now support) at 94, to which it is now consolidating.

The HYG may also be testing its short term top against the TLT as it reasserts its medium term relative uptrend short term top gainst the TLT, as shown in the lower chart.

 

 

 

Emerging Markets

The Local EM Bonds (ELD) ETF made a small recovery after breaking to new lows at the beginning of February. However, we now find it encountering resistance at 45.3 so we watch for a potential reassertion of the downtrend initiated by the failure from its highs at 54 in May 2013.

 

 

The EM Bonds in USD (EMB) ETF meanwhile forms a potential short term base above recent lows at 107 and medium term support at 105. We watch for further upside from here and note the next resistance level at 112.

 

 

 

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