Cracks In The Bond Market One thing we’ve noticed over the past few weeks is that U.S. Dollar-denominated bond prices have been extremely weak. For those not familiar with the pictured ETFs: LQD holds “investment grade” corporate bonds. JNK holds “junk bonds.” TLT holds long-term treasury bonds. EMB holds USD-denominated emerging market sovereign debt. MUB holds municipal bonds. All of these funds are down (the last two are barely up if you include interest collected), and all of them are trading weakly as of late after a strong start for the year (each was, at one point, up at least 2.5% for the year). We’ve also noticed that short-term treasury rates are rising; so are LIBOR rates. Looking just at Treasuries, longer-term we note a trend of a narrowing range (with support just above the 0% lower bound on rates) followed by a recent increase in volatility: 3-month Treasury yields recently
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