Watch HYG And Spanish Bonds

After an aggressive beating yesterday, HYG looked ready for a dead cat bounce at the very least.  It popped on the open but is grinding back towards unchanged. To the extent that retail is done chasing yield for now, that is worrisome. To the extent it is institutions playing in HYG it is a sign that they don’t believe they can execute much in the actual bond market – playing the game of calling dealers and having the bid fade is tiring, especially given how quickly sentiment seemed to have turn and the new issue overhang.

Overnight, Spanish bonds were weak, but bounced higher during the day (SMP?) but aware starting to leak lower again.

The mess in Greece is far from over, economies are a mess, and the chase for yield may be pretty well-played out and turn back into the run from risk.