In financial markets rot starts at the periphery and spreads to the core. For weeks, rot has been visible in the junk bond market and that rot has deepened sharply recently.

JNK – Barclays High Yield ETF

HYG – iShares iBOXX High Yield Corporate Bond Fund

Liquidity Trap

A potentially destabilizing run on junk debt has weighed on the bond markets. Investors in one fund are totally locked out of redemptions. And effective yields have soared. 

Please consider The Liquidity Trap That’s Spooking Bond Funds.