Stocks And Bonds Remain At A Historically High Correlation

For most investors, a negative or low positive correlation between equity prices and long-term bond prices is a preferred and time-tested way of keeping one's portfolio volatility low. However, this has been very difficult over the past two years as the four-year rolling correlation between the S&P 500 and US 10-year bond prices have remained around all-times (currently at 0.61). The recent past is in stark contrast to the 1966-2001 period when the correlation between equity prices and bond prices was consistently negative (and sometimes with a negative correlation that equal to today's positive correlation).