10.5.23 Yields Up, Inflation Down…Stocks Up?
As the tides of inflation appear to be shifting, we thought it would be interesting to look at the historical correlations between stock and bond yields during periods of these changes, and what it could mean for stock prices going forward.
Appropriate with any inflation story, we must start in the 1970s. Throughout the entire decade, with a brief lull between 1971 – 1973, we saw runaway inflation. Core CPI reached its pinnacle in February 1978, coming in at 11.7%. As inflation was raging, the relationship between equity prices and bond yields was inverted. Higher yields used to fight off inflation stymied stock returns. Be
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