• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Emerging Market Bond Fund ETFs Look Good
Stock

Emerging Market Bond Fund ETFs Look Good

by July 15, 2023
by July 15, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

US bond yields dropped sharply this week.

Below is the 2-year yield. One of the important technical characteristics of the chart is a double top. When a chart tests a prior high, we want to see if it succeeds or fails at the prior level that was resistance once before. Clearly the 2-year stopped and did a hard reversal. This pattern suggests the recent top could be a more intermediate top for the bond market, rather than just a short-term stall in price action.

With such a big focus on equity market gains recently, perhaps the bond market is waking up. The short-term notes have higher yields than longer-term bonds, which means the yield is inverted. You would expect a lender to get a higher rate of interest for loaning further out into the future. When they don’t get that premium, it is called an inverted yield curve.

What I noticed about the yield chart for the USA was the speed of the decline this week. The 2-year yield is down 40 basis points, or almost 10% from last week’s high. The 3- and 5-year yields were down even more on a percentage basis!

The spread between the 5-year yield and the 30-year yield last week was more than 30 basis points. On Thursday, the difference was just 3 points, so the spread dropped 90%. If we have put in the highs for the bond yields, that means we have put in the lows for the bond prices. Even if the bond market continues to drift sideways, the investor is still collecting a significant yield. But if we do have a recession next year, and typically the bond prices will rise as the Fed lowers rates, paying us yield and capital gain.

On the Market Buzz episode this week, I showed how the rest of the world equity charts were starting to slip. Will this perhaps start a rotation into bonds in foreign markets?

I started to hunt down some foreign government bond ETFs perking up. There were some bond charts that showed up as more interesting than in recent weeks. As an example, emerging market bond fund ETFs look good based on the charts. One of the things to watch for: if bond prices start to rally, will we have equity market weakness?

This leads to two scenarios:

If the rest of world is entering the recession before America, perhaps their government bonds are starting to move higher, which could provide a regular dividend payment and capital gains.On the other hand, if the recession fears are overblown, then some of the other high yield or corporate bond charts might improve more as the central banks pause or start lowering rates.

Let’s look at both ideas below.

Emerging Market High Yield Bonds

The case for emerging market high yield bonds getting better is shown below.

The chart ticker is EMHY. The chart is high yield emerging markets. This chart pays a 7% dividend and is starting to break out to the upside; that suggests an improving outlook.

Corporate Bonds

The next chart is for emerging market corporate bonds, but not high yield (higher risk). This chart is also turning up, and made the highest high since February. It pays a 4.4% dividend. Are the emerging market economies starting to improve as both of these charts are looking good?

Government Bonds

Now, if the emerging market world struggles, as their equity charts appear to be saying, it might be better to buy emerging market government bonds in an economic downturn. In 2022, we had an interesting year, as both bonds and equities fell together. Usually, we tend to see bonds do well when stocks are weakening. If we are going back to a normal rotation, perhaps we’ll see the interest in government bond markets perk up. As yields fall, bond prices rise. Capturing a yield, as well as capital appreciation, makes the trade work out nicely. The yield is 5.4% on this government bond ETF!

What these charts suggest to me is that the highs for the emerging market bond yields are in, and we are starting to see bond prices rise. Will high yields continue to go higher with government bonds?

Every week, the stock market continues to surprise on the upside. We have been talking about the big moves up in commodities over the last few weeks. I’ll have a lot more ideas after rolling through the charts this weekend. If you would like to sample our work, there is a $7 one-month trial subscription offer that you can try at OspreyStrategic.org. This will also allow you to read up on our past newsletters and watch our previous videos.

One of the things our members have found helpful is the Osprey Opportunities page, with good looking charts provided based on themes or industries.

I think you’ll find using the Osprey Opportunities pages to be helpful. Feel free to try it at OspreyStrategic.org for just $7!

You Might Also Like
  • DP Trading Room: Tariffs Narrowing, Sparks Market Rally
  • Market Pullbacks Provide Opportunities to Build your WatchList – Here’s How
  • My Favorite RSI Signal
  • Top Stock Areas After the Rally: What Smart Money Is Buying
Share
0
FacebookTwitterPinterestWhatsapp

previous post
David and Goliath, or the Small vs. Large Caps
next post
Earnings Season in Full Swing: What You Can Expect

You may also like

5 Strong Stocks Defying the Bearish Market!

March 11, 2025

Top Two Sectors to Watch in April 2024

April 3, 2024

Block and Loaded: Targeting Gains in SQ

January 3, 2025

The Best Five Sectors, #3

January 18, 2025

Odds Favor Further Selling This Week (Maybe a LOT of...

October 22, 2023

Week Ahead: NIFTY Face Imminent Consolidation; VIX Plunges to 2020...

April 30, 2023

MEM TV: This Stealth AI Stock is Ready to EXPLODE...

May 11, 2024

Rules-Based Money Management – Part 8: Putting Trend-Following to Work

June 6, 2024

Let Your Scans Do the Legwork: Finding Great Stocks to...

April 25, 2023

The Ord Oracle April 25, 2023

April 26, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,632 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    The Hoax of Modern Finance –...

    March 7, 2024

    Top Five Charts of 2023 #1:...

    December 18, 2023

    S&P 500 Under Pressure, Can Strong...

    November 2, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here