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Bears Stampede Out of High-Yield ETFs With Fed Backstop in Play

  • Short interest on State Street’s JNK at lowest in four years
  • Investors pile into bond ETFs despite tensions, virus risk
The Marriner S. Eccles Federal Reserve building stands in Washington, D.C.
The Marriner S. Eccles Federal Reserve building stands in Washington, D.C.Photographer: Andrew Harrer/Bloomberg

Bearish bets on exchange-traded funds that track high-yield bonds plunged as the Federal Reserve stepped into the market.

Short interest as a percentage of shares outstanding on the $12 billion SPDR Bloomberg Barclays High Yield Bond ETF, ticker JNK, sank below 2% -- a four-year low -- after surging to as high as 25% in early March, according to data from IHS Markit Ltd. For the $25 billion iShares iBoxx High Yield Corporate Bond ETF, ticker HYG, bearish wagers are at the lowest level this year.