The message from the yield curve has been that risk never really went ‘OFF’ in the markets, despite what the HYG junk bond fund was doing (which was dropping).  Aside from the yield curve as noted yesterday, another risk ‘ON’ sign has been that HYG vs. LQD and TLT, which are the actual credit spread indicators we use (as opposed to nominal HYG), has remained stable and in decent little patterns while nominal HYG dropped short-term.

On the bigger picture these spreads indicate caution (by long-term charts), but that is going to be measured in weeks if not months, assuming they remain negative.  But this short-term issue seems capable of resolving for the bulls.

I am going to be free of all short positions in anticipation.  (NFTRH+ note:  That includes EZU, covering for a teeny).