Higher Inflation May Increase Stock Bond Correlation

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Park
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Higher Inflation May Increase Stock Bond Correlation

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https://www.blackrockblog.com/2018/01/2 ... paign=hero

"The correlation between stocks and bonds tends to move with nominal growth, the sum of real growth and inflation...

Besides growth and inflation...stock-bond correlations have had a positive correlation with the real-federal funds rate (effective federal funds rate minus the consumer price index)"

https://www.blackrockblog.com/2017/07/2 ... rrelation/

"When stock-bond correlations are presumed to be negative, portfolio construction favors traditional Treasury bonds—particularly long-dated ones—as a good source of both carry and diversification. When stock-bond correlations are positive, other hedges—notably cash—may be preferable."
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