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Low Inflation, High Vol?
For the better part of two years, multi-asset investors were bedeviled by that most nefarious of market dynamics: A positive stock-bond return correlation.
If you're young (or relatively young) you've spent most of your investing lifetime enjoying a "have your cake and eat it too" conjuncture, wherein both stocks and bonds generally rallied over time, but nevertheless exhibited a negative correlation such that gains in one asset cushioned losses in the other (typically bonds performing when sto
Makes sense. If deflation, then many bad things of which higher equity vol might be the least. Ask Comrade Xi.
However, what are the odds of CPI deflation in the US, given a labor market that is still far from loose? If goods CPI is -ve and shelter flat, services CPI +ve would keep CPI +ve even if very low. Fed likely fears deflation even more than inflation, would cut rates briskly.