Boring Investment Grade bonds could be sending a very important macro message of late!
This chart looks at Investment Grade ETF (LQD) on a weekly basis over the past 20-years. LQD formed a bottom in late 2008, several months ahead of stocks. Following the 2008 low, LQD has spent the majority of the past 12-years inside of rising channel (1).
Sudden weakness in LQD of late has it attempting to break below rising support at (2), which means rates are moving higher for investment-grade bonds. This weakness is taking place while the Fed is attempting to push down rates.
Odds are good that LQD will see a retest of support line (3), which comes into play around the $110 level.
If LQD breaks support at (3), these quality bonds would send a negative message to the economy and stocks. Keep a close on LQD friends, as a very important support test is at hand!!!