Much has been made about the rather disturbing trend this year for the price of just about every asset class to go up. As shown below, stocks and bonds normally go in opposite directions over long stretches of time, however, that’s not been the case this year.
In fact, 2014 has, so far, proved to be quite the outlier in many respects for how stock and bond prices have moved for reasons that should be clear below.
With the exception of very early in the year and then a few other much shorter intervals, you might think that the two curves below are just two different stocks or stock indexes, rather than the broadest measures of U.S. stocks and long-term U.S. debt.
With U.S. stocks up 7 percent this year and long-dated Treasuries up 18 percent, the only year in recent memory that comes close to this sort of performance is in 2010 when stocks rose 15 percent and bonds gained 9 percent.
This was, no doubt, influenced by the launch of one of the Fed’s various money printing efforts, however, here in 2014, they’re winding things down.
