Relationship between stock market and bonds
This may be a bit surprising, given that the stock market has been down for four-straight sessions, and bonds' safe-haven status means they often enjoy a boost when stocks fall.
But some market professionals say that with the Federal Reserve 's next move becoming increasingly uncertain, the traditional relationship between stocks and bonds is breaking apart. She is driven by data and models, and if the labor market continues to improve, she will tighten policy even if that hurts equities.
Given that bond prices could consequently fall due to Fed tightening while stocks fall alongside them, "we should be aware of the possibility of a breakdown of the correlation between stocks and bonds," Isharc wrote to CNBC.
Read More Don't start your weekend yet: A less dramatic explanation may be that the fixed income market's reaction to last week's Fed statement—wherein bonds rallied on the expectation that rate hikes aren't coming anytime soon—was simply overdone. Still, market participants are painfully aware that the first rate hike is drawing ever nearer with each breath, even as none of us knows when the dreaded day will finally arrive.
Andrew Burkly, head of portfolio strategy with Oppenheimer, said Thursday on CNBC that "a specific catalyst today could have been the jobless claims data, which is yet another piece of evidence that the job market is improving here, and it just gives the Fed a little more confidence that they can continue on their path to normalization. With bonds responding aggressively to every bit of data that emerges, perhaps Treasury will indeed dance to different music than stocks—and days when bonds fall or rise alongside the stock market will become more common.
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Time to Worry: Stocks and Bonds Are Moving Together - WSJ
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Relationship between stocks and bonds - Business Insider
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Trading Nation Videos Trader Bios Commentary. The relationship between stocks and bonds may be changing Alex Rosenberg AcesRose. It's been a difficult few days for Treasurys.
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Intermarket Relationships: Following The Cycle
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