udging from the flow of money out of high-yield bonds, investors are
getting increasingly leery of a market that continues to hover around
record levels, despite a handful of rough trading sessions in November
and a rocky start Friday.
Funds that track junk bonds saw $6.8 billion of outflows over the past week through Wednesday, according to Bank of America Merrill Lynch. That's the third-highest on record.
The sector is considered a key proxy for the stock market, with performance that has followed almost a perfect correlation with the S&P 500 in terms of direction. Bonds are normally thought as a safe-haven trade that benefits when stocks weaken, but high-yield represents a risk similar to equities.
The correlation in 2017 has varied: September was the high for the year at 76 percent, while June was just 42.4 percent, according to DataTrek Research. (100 percent would mean the assets move exactly in tandem.)
Read more: Investors flee junk bonds in troubling signal for stock market
Funds that track junk bonds saw $6.8 billion of outflows over the past week through Wednesday, according to Bank of America Merrill Lynch. That's the third-highest on record.
The sector is considered a key proxy for the stock market, with performance that has followed almost a perfect correlation with the S&P 500 in terms of direction. Bonds are normally thought as a safe-haven trade that benefits when stocks weaken, but high-yield represents a risk similar to equities.
The correlation in 2017 has varied: September was the high for the year at 76 percent, while June was just 42.4 percent, according to DataTrek Research. (100 percent would mean the assets move exactly in tandem.)
Read more: Investors flee junk bonds in troubling signal for stock market
