A contradictory message is being sent out to investors
Do not be suspicious of equities and bonds being positively correlated. A current theme of analysts' conversations is the apparently contradictory message that the recent rally in both equities and government bonds appears to be giving. After all, a rally in equities suggests confidence in earnings projections and in growth of demand, while a rally in bonds suggests the opposite scenario of low growth with fears of deflation caused by weak demand. Yet this is to forget that bond and equity markets are not always locked into a zero sum game of 'I win, you lose.' Declining yields in the U...
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