Morgan Stanley: Stock-bond correlation approaches historical highs
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Golden Ten Data, May 27 – According to a report by Morgan Stanley strategists, the rising global bond yields have pushed the stock-bond correlation in developed markets close to historical highs. They stated that, historically, when US Treasury yields break through approximately 4%-5% and European bond yields exceed around 3%-3.5%, higher yields begin to have a negative impact on stock valuations. "Supported by strong earnings growth, risk assets may withstand higher interest rates, but bond volatility remains a medium-term risk." They added that bond volatility is often a greater driver of stock valuations, especially within a six- to twelve-month timeframe.
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