High yield bonds are a very reliable indicator of risk-on behaviour of investors. Very often they start falling before equities sell off. See the chart below – investors had less appetite for junk bonds in the early part of 2020 and prices started falling.
Investors have appetite for this asset class when they are confident about the near term future and are ready to risk on companies which are below investment grade.
In March prices started rallying again and they have bounced nicely off the lows with all moving averages aligned now. However we have still not captured the previous highs. So while the setup is bullish, we need to take out the previous highs for us to be confident that this risk-on behaviour will sustain.