BlackRock: Stock-bond correlation negative for 2019 - Bloomberg

According to BlackRock Inc, the stocks-bonds directional correlation will see itself remain steeply negative for 2019.

Key quotes

“We see the correlation between equity and bond returns remaining significantly negative in 2019 as the economic cycle enters its latter stages,” Richard Turnill, BlackRock’s global chief investment strategist, wrote in a note to clients. “Bonds may offer a more formidable ballast to equity exposures.”

For both asset classes to tumble in unison, it would probably require a big pick-up in inflation that led to a more hawkish Federal Reserve, Turnill wrote. Economic data will be the dominant market driver, he concluded.

Still, BlackRock has a neutral stance on U.S. Treasuries, judging that fears about economic weakness may be overdone from a short-term perspective. Investors should wait for a rise in yields before adding to positions, Turnill wrote.