Will negative stock-bond correlations continue?

One of the more important developments in markets since the late 1990s has been the emergence of a negative stock-bond price correlation.

This has allowed a balanced portfolio of stocks and long government bonds to sidestep losses during the past two equity bear markets.  If this relationship could be relied upon to continue, it would have profound implications. Both equities and bonds would become more valuable as the risks associated with each could be cheaply hedged by holding the other. This is the asset allocator's Holy Grail.  BoE eyes 'modest tightening' to meet inflation target Unfortunately, negative correlations cannot be relied upon. From the end of WWII to the early 1960s, negative correlations did pre...