Cross-asset

Treasuries Have Started Moving With Stocks.

The 60/40 Bond Hedge Is Quietly Weakening

The textbook job of a Treasury bond in a portfolio is to zig when stocks zag. That is the whole reason a 60/40 mix exists: when equities fall, bonds are supposed to rise and soften the blow. In practice that relationship has been mildly positive rather than negative for a few years now, with the 30-day correlation between intermediate Treasuries and the Nasdaq sitting near positive 0.10. In the latest 30-day window even that thin cushion has gone, with the same correlation climbing to about positive 0.57. Bonds are now moving with stocks, not against them. And it is not only bonds: gold and silver have re-rated the same way over the same stretch. This is not a recommendation and it is not a forecast. It is a…