• The positive correlation between equities and Treasuries — which frustrated investors looking to diversify across asset classes in 2022 — peaked late last year. Since then, the correlation has moved lower, and recently turned negative.

• For investors, this means that equities and Treasuries are more likely to move in different directions, and that some traditional asset class hedges might be in play again.

• It’s important to note that there are broader measures of bond performance (e.g., the Bloomberg US Aggregate Bond Index) that may not have turned yet.

• An active approach can help adjust asset allocation decisions to changing correlations. And it can be important to successfully navigating this environment.

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