The Shift Away from Bonds and into Equities in an Inflationary World

Investors will have to adapt to the fact that bonds are no longer a safe asset with negative correlation to equities. The positive correlation between bonds and stocks seen last year is indicative of a broader trend. With the US Treasury issuing more bonds, it is logical to move money into equities as they benefit from an inflationary world through increased revenue. In countries with high inflation, stocks perform well in nominal terms. Therefore, a shift from treasuries to real estate, equities, and gold would be the logical step.