Stocks and Bonds Are Both Up Today

Not only is today a good day for the stock market (the S&P 500 even got into Black Death territory of 1348-49), but the bond market is also doing well. This has been fairly rare recently to have both markets rally on the same day.

Below I have a chart of the daily changes for the past year of the S&P 500 ETF ($SPY) on the X-axis and the Long Treasury Bond ETF ($TLT) on the Y-axis. As you can see, the returns have been negatively correlated.

What does a re-convergence mean? It’s hard to say because both can be correlated on the up or down side. I should add that the TLT is the iShares Barclays 20+ Year Treas Bond ETF and that maturity hasn’t been the prime focus of the Federal Reserve’s QE2 policy.

So what happens when paper assets are doing well on the same day? Hard assets like gold and silver are down.

Posted by on April 26th, 2011 at 2:11 pm


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