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Rupture in the Stock-Bond Relationship Shows Recession Angst Rising Fast

  • Growth replacing inflation as bigger fear in financial market
  • The silver lining: Treasuries act as cushion for equity losses

A sudden shift in the choreography between stocks and bonds is evidence investors no longer consider inflation their biggest bugaboo.

Where once spiraling prices ruled their nightmares, now it’s an increasingly unanimous belief that the Federal Reserve’s efforts to subdue them will cast the world into a recession. Those concerns ramped up Tuesday when reports showed new home sales plunged and growth in the services economy slowed.