Assessing Recent Dynamics in the World of Vol
Alpha Exchange
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The Return of the Negative Correlation Between Stock and Bond Prices
Q2 saw a modest return to the more traditional negative correlation between stock and bond prices. It's difficult to know where this is headed, but it's certainly the case that the correlation should not be viewed as especially reliable in a regime in which the Fed continues to fight inflation from above target. For different reasons, if interest rates either fall or rise very quickly, the outcome is bad for risk assets.
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