FYI: • A feature of October’s 11.5% intra-month S&P
500® decline (ending in a 1-month return of
–6.8%) was that bond yields barely moved.
• The 5-year correlation between stocks and
bond yields peaked in 2015 and has come
down steadily since. Will it flip to negative like
it did during the mid-1960s?
• If so, investors may need to reconsider how to
protect against downside equity risk.
• That doesn’t mean bonds no longer play an
important role in a diversified portfolio, since
they still provide income, diversification, and
lower volatility.
Regards,
Ted
https://www.etf.com/sites/default/files/pdfs/Lessons_from_Sixties_ETF.com.pdf
