Draghi QE Turns Stocks Into Bond Appendage as Correlation Jumps
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Mario Draghi’s quantitative-easing program is tying together the fate of Europe’s stock and bond markets to a degree not seen in almost two years.
Since the European Central Bank president began buying government debt, the correlation between moves in the Euro Stoxx 50 Index and a gauge tracking the region’s bonds has climbed to its highest level since September 2013. While that served bulls when fixed-income markets gained to start the year, lately it’s been all downside with equities following bonds to a loss of 6.7 percent.