Junk Bonds Get Destroyed at the Close

Minyanville

Stocks finished lower on Friday following the release of a mixed batch of economic data.
US stock futures started the day on a negative note following weakness out of Europe, namely, a drop in German retail sales and an increase in EU unemployment.

[More from Minyanville.com: X Factor: 5 Stocks Reaching Their Ex-Dividend Date on June 6 ]

We also saw some bad numbers stateside as the April Personal Income and Personal Spending numbers were both below expectations.

However, the S&P 500 (^INX) perked up in early trading after the May Chicago PMI and University of Michigan Consumer Sentiment came in above economists' estimates.
This led to some short-lived strength. Following an early pop, the major averages declined steadily through the day before diving in the late afternoon.
In the bond world, US Treasury yields continued their ascent, pushing bond prices down sharply. Junk bonds in particular took a major hit, and the sector's flagship ETF, the iShares High-Yield Bond Fund (JNK) is approaching new lows for the year following a steady rally into early May.

[More from Minyanville.com: Bond and Currency Markets Starting to Sound Off Bearishly in Unison -- Finally ]

There was notably heavy volume in JNK around the close, as you can see in this chart showing the last hour of trading:

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It was an ugly day overall, though Lions Gate (LGF) was an outlier to the upside, rising 3% after reporting better-than-expected fiscal fourth-quarter earnings.

[More from Minyanville.com: Pre-Market Primer: Personal Income, Consumption Reports Disappoint ]

Monday's Financial Outlook

On Monday , the economic data party will continue: At 10:00 a.m. EDT the April ISM Index and Construction Spending reports will be released, with the less-important May auto and truck sales numbers following at 2:00 p.m.
There are only four companies reporting earnings, none of which are likely to move the market.
Elsewhere, traders are likely to continue focusing on interest rates and the possibility of the Fed tapering its QE activities, especially as Treasury yields are hitting new highs for 2013.

Twitter: @Minyanville

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