Yes, there are call constraints. Yes, there are 'beta' differences. But, given the strong technicals (fund flows) and empirically high correlations between the much-more-like-stocks-than-bonds high-yield credit market and the equity market, the current divergence between equity ebullience and credit curmudgeon-ness is all-too-reminiscent of the post-LTRO2 sanity check that credit 'imposed' on equities. Not only are high-yield bonds underperforming stocks (as we warned last week [4]), but the HYG ETF is now trading at a significant discount to intrinsic value which (back in March) was the start of a more pronounced downturn as cash bonds were force-sold into an illiquid market backdrop.
[5]
Charts: Bloomberg