Some asset prices are moving together in unusual ways, an indication that invest...
NEW YORK - Some asset prices are moving together in unusual ways, an indication that investors may be preparing their portfolios for a coronavirus-led global slowdown.
Such synchronous moves are not typical, as investors usually have different reasons for buying each asset class. A bullish bet on stocks, for example, is often a wager on stronger economic growth, while gold and bonds tend to find favor in more pessimistic times. Correlation is measured on a scale from minus one, which represents asset prices going in opposite directions, to plus one, indicating prices moving in perfect tandem.
“Market participants are looking at U.S. assets as a safe haven no matter what asset class,” said Mark McCormick, global head of foreign exchange strategy at TD Securities. That is seen as positive for stock prices, which have been buoyed by years of low rates, as well as gold, which struggles to compete with yield-bearing assets when rates rise. Bonds also become attractive because their prices rise when yields fall.
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