Do bonds and stocks really move in the opposite directions?

[0008]

I found many times they move together. Are there any evidences bonds are good buy when the stock market is dropping?

 

[maxinger]

 

[Nobert]

I found many times they move together. Are there any evidences bonds are good buy when the stock market is dropping?

When it comes to a longer holding periods, it's a cliche, back from the days when bonds would give an interest of 10%.

 

[nitrene]

In the early credit cycle bonds & stocks both go higher since lower interest rates mean easy borrowing for companies & of course lower rates mean higher bond prices.

In the late cycle (which we seem to be in) bonds definitely go lower but stocks are a mixed bag. Usually in the early days of the rate rise from the Fed stocks go down but if the rates don't create a lot of slowing of the economy then stocks go up but the sector make of the stocks changes.

Lower rates means tech, retail, REITs. etc. should do well but in a rising rate environment Energy & Banking do well along with stodgy companies that don't require external funding.

edit: I added the following

When the recession comes bonds traditionally rise since it is seen as a safe haven -- this is really only true for Sovereign Debt and not corporates. I believe however this time I'm not sure a downturn would create a lower interest rate so I have a hunch that the US dollar is actually the new Soveriegn Bond.

 

[zdreg]

Bond and stocks move in opposite directions until they don't.

 

[globalarbtrader]

Only if inflation is low

GAT

 

[xandman]

It might be a tighter relationship to real rates or "the direction of".

 

[0008]

Only if inflation is low

GAT

Yes. They move together more than than often.