Behind The Markets Podcast: Steven Hou
Behind the Markets Podcast
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Will Bonds Be the Risk Off Hedges?
Since the 60s and 2000s, if you calculated a rolling return correlation trailing two years of stocks and bonds, you'll find that it's mostly been positive. But when inflation dominates cash flow, inflation enters through the discount rate on the denominator, it's going to drive stock and bonds up and down together. When inflation is very muted in a regime of generally this inflationary regime, nobody's worried about inflation, then you're going to have this negative correlation.
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