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Bond markets have been in a slump. Various bond ETFs stabilized a bit in the past quiet week. By examining the following trend score table for bond ETFs that represent various fixed income subclasses, one can gain some insights into the current fixed income world:

  1. The once considered safe bonds, such as municipal (MUB, CMF, NYF), mortgage back securities (NYSEARCA:MBB) and intermediate Treasury bonds (NYSEARCA:IEF) have been in a down trend.
  2. In the risky end, high yield bonds and emerging market bonds are doing relatively well. However, it should be pointed out that emerging market bonds (PCY, EMB) had big drop in the past month, mostly due to the concern of inflation pressure in countries in emerging markets.
  3. U.S. inflation protected Treasury bonds (NYSEARCA:TIP) suffered from the same fate in the last two months, though they are still in the positive trend territory.
  4. International inflation protected bonds (NYSEARCA:WIP) gained top spot among the diverse array of bond asset classes.

For more detailed total return performance, please see here.

Assets Class Symbols 12/31

Trend

Score

12/24

Trend

Score

Direction
International Inflation Protected WIP 4.74% 3.37% ^
High Yield JNK 4.6% 4.85% v
International Treasury BWX 2.93% 0.99% ^
Emerging Mkt Bonds PCY 1.6% 1.81% v
Long Term Credit LQD 1.38% 1.46% v
Inflation Protected TIP 1.16% 0.65% ^
Intermediate Term Credit CIU 0.93% 0.72% ^
Short Term Credit CSJ 0.52% 0.36% ^
Short Term Treasury SHY 0.38% 0.17% ^
Intermediate Treasury IEF 0.19% -0.21% ^
Treasury Bills SHV 0.05% 0.01% ^
US Total Bond BND -0.07% 0.18% v
10-20Year Treasury TLH -0.36% -1.0% ^
MBS Bond MBB -0.66% -1.29% ^
20+ Year Treasury TLT -1.34% -1.93% ^
National Muni MUB -2.8% -2.78% v
New York Muni NYF -3.66% -2.97% v
California Muni CMF -5.57% -4.03% v

We make an educated guess that, given the uncertainty in fixed income markets: U.S. dollar being under (long term) pressure, ongoing inflation in emerging markets and possibly world wide (dollar denominated), international inflation protected bonds hold the best hedge at the moment.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: International Inflation Protected Bonds: Double Hedge in Uncertain Times