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The 60/40 Portfolio Has Worst Loss Since March 2020 on Fed

  • Loss in both stocks, bonds hammers diversified portfolios
  • Stagflationary economy would be worst outcome for the strategy
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60/40 Portfolio Set for Worst Slide Since March 2020
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A bedrock of long-term investing, a portfolio split 60/40 between equities and high-quality bonds, posted its worst monthly slide since the market meltdown in the early days of the pandemic.

Both equities and bond prices dropped sharply in January as markets priced in a faster pace of interest-rate tightening during 2022 from the Federal Reserve. The central bank’s hawkish pivot from mid-December intensified after last week’s policy meeting, with leading Wall Street economists calling for at least five and possibly as many as seven quarter-point rate hikes this year.