Not sure the Vanguard fund is a good proxy, since it has Treasuries, GSEs (Freddie, Fanny, etc.) and some German bank bonds
When I read that, I said 'Huh?'. Since I have a small amount at play in this fund, I'd be disappointed if they'd strayed so far from their charter. (Intermediate Term Corps). Perhaps what you are seeing are investments of short term cash, IMO. Vanguard.com has more detail about what they hold. Looking there, I do see 15% exposure to treasuries and agencies as of 8/31, which seems a might high. I'm happy to consider other proxies as an index for Corporate bonds. I think there is a published 'index'.
Another chart, VG High Yield vs Intermediate term Corporates.
finance.yahoo.com
finance.yahoo.com
Tracking High Yield very close as I think it will outperform if recovery becomes apparent. If I had to identify which segment might outperform given macros, I think HY is it. If I knew more, I'd be short 10yr treas and long HY/IC at this point, maybe via a call or put on TNX. A 'spread' play. BWDIK?
Looking at the chart, you can see HY rallied with stocks off 7/24 (narrowing HY/TNX spread), then fell in September with the market. Intermediate term corporate held despite the lower equity market until the past week or so.
The real point of my original reply, was consider how you interpret a phrase like 'yield spreads narrowed'. In this case, treasuries rebounded a bit from overbought, while corporates haven't done much of anything. Yet. |
