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MBS Day Ahead: Surprising Resilience in Bonds or Surprising Strength in Stocks?

Friday, July 10, 2020   /   by Erik Bjorklund

MBS Day Ahead: Surprising Resilience in Bonds or Surprising Strength in Stocks?

Conventional wisdom holds that stocks tend to do better when bonds do worse.  The logic is simple.  When investors feel more optimistic or more risk-tolerant, they're more likely to re-allocate some bond holdings into stocks.  When they're fearful and risk-averse, bonds get the nod.  The result is short-term correlation between stock prices and bond yields, and we've seen plenty of that as both sides of the market capture investor sentiment surrounding coronavirus numbers.


But the important part of this thesis on conventional wisdom is the "SHORT-TERM" caveat. ...

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