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Not so balanced anymore: The world has changed

The Market Ear Picture

Some that once was in Risk Parity is lost...

That balanced equity bond portfolio ain't what it used to be. The bond sell-off in Q3 due to sticky inflation and more hawkish comments from the Fed and BOE has started to narrow the gap between equities and bonds - the S&P 500 had it's first 5% draw-down while the usual savior, treasuries, failed to protect as US 10 year yield spiked. While the S&P 500 draw-down still is relatively small, the combined equity and bond sell-off has weighed more on 60/40 portfolios and our beloved Risk Parity. Let's have a look.

60/40: not a bull market any longer...