Bonds move in mysterious ways

Contrary to custom, bond and stock prices are hitting records at the same time in America.

"It isn't supposed to happen that way," says Anna Louise-Jackson on Bloomberg.com. Stocks and bonds are typically "risk-on/risk-off complements", moving in opposite directions. Under normal circumstances, good economic news causes stocks to rise and bond prices to fall, as fixed-income investors begin to factor in higher inflation and interest rates.

Similarly, bad times spur demand for the relative safety of bonds, along with expectations of lower rates. Yet in the US, bond and stock prices are hitting records at the same time an unprecedented situation. The S&P 500 hit a new high early this week while the yield on the US ten-year Treasury bond reached a new low under 1.4% (yields move inversely to prices). So what's going on?

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Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.