Morgan Stanley: Stock-Bond Correlation Nears Record High as Yields Surge

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According to Morgan Stanley strategists, on May 27, the correlation between stocks and bonds in developed markets has approached historical highs, driven by rising global bond yields. Historically, when U.S. Treasury yields break through approximately 4%-5% and European government bond yields exceed 3%-3.5%, higher yields begin to negatively impact stock valuations. The strategists noted that bond volatility tends to be a larger driver of stock valuations, particularly within a 6-to-12-month timeframe.
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