The high yield bond etf JNK fell out of bed this week. That’s significant because it was already in a long, steady decline. It’s even more significant because it prompted some trouble in “Big Fund Land.” Be sure to watch this space closely. It was liquidity (or the lack thereof) that prompted that nastiness several years ago. If too many big funds start preventing redemptions, there’s nothing to say that we won’t have a repeat… and this time the Fed would have to start “printing money” immediately as opposed to having some cushion to lower rates.
Simple traders would have been gone (for good) from this security since Q3 2014, but the folks from Big Fund Land think they have better crystal balls…