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Stock, Bond Market’s Worst Start in Decade Revives 60/40 Doubt

  • Combined losses swell to almost 5% in 2022 amid Fed angst
  • It’s yet another test for the popular allocation strategy

A joint drop in equities and bonds is hitting exchange-traded fund investors with the worst start of a year in a decade.

Investors who subscribe to the moderate-risk portfolio strategy of 60% stocks and 40% bonds have been walloped this week. Treasury yields spiked higher on concerns the Fed will raise interest rates and reduce its bond holdings, increasing the cost of capital throughout the economy. The specter of interest rate hikes also fueled a rout in highly valued tech stocks, whose future earnings become less valuable when rates increase.