MBS Day Ahead: Do Bonds Care About All-Time High Stocks?
Posted To: MBS Commentary
It's age-old conventional wisdom. Buy stocks, sell bonds, vice versa, risk-on vs risk-off . One of the most common questions I receive over the years (or comments, in the frequent cases where people email me telling me what's about to happen in the market) is some iteration of "why are bonds doing this if stocks are saying they should do this?" Of course if it's phrased as a comment, people are telling me that bonds will do one thing because stocks are doing another (or stocks will be forced to follow the suggestion of bonds). These questions (and comments) exist because there are plenty of past examples that support them. There are even present examples if we zoom in to a narrow enough timeline. But the farther we zoom out, the more the conventional wisdom falls apart…(read more)