High Yield Bonds versus Treasuries just pushed to an 11-month high.
Here’s the chart:
Let's break down what the chart shows:
The chart displays a black line tracking the ratio of High Yield Bonds to Treasury Bonds.
The lower panel displays the Daily RSI.
The Takeaway: High yield credit is outperforming Treasuries at levels not seen in 11 months.
That is not defensive behavior.
That is money moving toward risk.
This ratio only rises when investors are willing to hold lower-quality debt rather than government paper. Investors do not make that bet when stress is building in the market.
The ratio has now completed a bearish-to-bullish reversal pattern. Price stopped making lower lows, formed a base, and broke out through the key reversal level.
Momentum confirms that shift. RSI flipped into a bullish regime as price cleared the range. RSI now sits at its highest level since November 2024.
If markets were preparing for trouble, Treasuries would be winning. They are not.
This does not promise prices will move in a straight line. But this tells us that the market is not positioning for defense. Money is leaning into risk, not away from it.
So, the message is clear. Risk is on!
Are you positioned for risk expansion or trading defensively?
If you find my content valuable, I would greatly appreciate it if you could share it with your friends, family, and colleagues. Your help in spreading the word is invaluable in supporting our work. Thank you to all of you who share!
