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The Global Trend of Positive Stock/Bond Correlation
Inflation soared in the post-COVID period, and markets became laser focused on inflation data and its potential impact on central bank policy. Higher interest rates coinciding with a lower equity risk premium, causing stock/bond correlation to turn from negative to positive. This trend has made it harder for investors to use fixed income as a hedge against equity beta risk. In this paper, authors dig deeper into the reasons behind positive correlation across various regional markets, including the US. […]