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Forget 30 Years of Stock and Bond Divergence, Bernstein Says

  • Positive equity-bond correlation to come back, Bernstein says
  • Investors should expect lower returns in next five to 10 years
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Risk of a Return to Volatility in 2017

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It was nice while it lasted.

Three decades of divergence between stocks and bonds may be about to end, according to Sanford C. Bernstein & Co., necessitating a total shift in investor assumptions. The new era, marked by rising or more volatile inflation, will see equities and bonds return to the correlation they’ve displayed since 1763, analysts led by Inigo Fraser Jenkins wrote in a recent note to clients.