State Street SPDR Bloomberg High Yield Bond ETF

JNK

Market cap $7.69B

SPDR Bloomberg High Yield Bond ETF ( NYSEARCA:JNK ) isn't actually invested in junk.

Retiring on passive income from dividends is a great way to reduce sequence of returns risk. Many investors generate this income from a basket of high-yield CEFs and ETFs. However, this strategy comes with a lot of risks and shortcomings.

Risk-off mood hits junk bonds as CCC debt slides. While JNK, FTSL, HYLS & peers face pressure, safer plays like LQD should gain investor favor.

These two high-yield funds combine dependable income with exposure to some of the strongest long-term secular trends. They offer high yields that are backed by portfolios filled with high-quality companies. They also trade at very attractive valuations and provide strong dividend growth.

Corporate bonds that are below investment grade status may be less likely to default now. But investors still need to be careful.

The SPDR Bloomberg High Yield Bond ETF offers diversified exposure to US high-yield corporate bonds, aiming to convert credit risk premium into regular income. JNK's performance is driven by coupon income and price changes linked to credit spreads (OAS) and macroeconomic factors like bank lending (SLOOS) and real interest rates. Currently, OAS is in a low-mid range and bank lending is less tight than recent peaks, making carry the main source of return for JNK.

The bond market looks increasingly focused on slowing economic growth vs. tariff inflation.

JNK offers diversified high-yield bond exposure with limited concentration risk and a higher yield, offering investors a high-income, diversified portfolio strategy. The ETF is sensitive to interest rate movements; potential Fed rate cuts could benefit returns, but persistent inflation may delay such cuts. Sector exposures—especially consumer cyclicals—face headwinds from tariffs and inflation, while energy and communications present mixed outlooks.

The U.S. junk bond market is sending an optimistic message about the economy, despite market volatility around tariffs.

In recent days, a new headwind is weighing on fixed income securities: a US government budget bill, which is expected to significantly raise an already hefty federal deficit in the years ahead. Long-term Treasuries are the biggest losers post-Liberation Day, based on a set of ETFs through yesterday's close (May 21).