Will An ‘Unsustainable’ Rally In Stocks & Bonds Extend A Soaring Quarter For ‘Sleep-Easy’ Portfolios

Ted

FYI: For investors who followed a “sleep-easy” portfolio balanced between stocks and bonds, the twin-barreled rally in both assets in the first quarter of 2019 has delivered close to double-digit returns.

Yet market participants say these gains have led equities and debt yields to send wildly contradictory signals over the U.S. economy’s health, with the rise in equities indicating the recent slowdown will only remain a soft patch, even as the rise in bond prices and slide in yields imply a more pessimistic outlook for the rest of the year. This divergence between equities and yields goes against textbook finance theory, drawing questions of how long this benign environment for both risk and haven assets can last.

“The truth could be somewhere between what stocks and bonds are saying. But it’s unsustainable,” Franck Dixmier, head of global fixed-income at Allianz Global Investors, told MarketWatch.
Regards,
Ted
https://www.marketwatch.com/story/will-an-unsustainable-rally-in-stocks-and-bonds-extend-a-soaring-quarter-for-sleep-easy-portfolios-2019-04-06/print

davfor

Interesting short read. The rally is fun while it lasts and certainly a relief after quarter four of last year. The two largest holdings in my portfolio each have about 50% in stocks with the balance in bonds and other diversifying stuff. Everything seemed to click for them in quarter one. RPGAX was at +9.1% and GDMZX was at +8.8%. (A head shake followed by a triple check of the end of quarter numbers confirmed that's what happened.) I can not imagine it will be smooth sailing for the entire balance of the year. But this was a welcome start....