Fidelity’s Timmer Doubts 60/40 Revival as Stock-Bond Correlation Slips
Jurrien Timmer, Fidelity Investments’ director of worldwide macro, doubts the 60/40 portfolio is again. His chart reveals the five-year stock-bond correlation nonetheless above zero at present Treasury yields.
The 60/40 portfolio, which holds 60% shares and 40% bonds, depends on bonds rising when equities fall. Falling correlation seems favorable, but Timmer argues larger yields maintain the 2 shifting collectively. As a outcome, 60/40 holders may have much less cowl.
How Does Yield Level Shape the Stock-Bond Correlation?
Timmer’s chart tracks how carefully the S&P 500 and long-dated Treasuries have moved over 5 years. In 2013 and 2020, when yields had been extraordinarily low, the studying sank deep into adverse territory. It turned constructive as yields climbed.
The newest studying sits between 10% and 12%, based mostly on knowledge via November 2.
“With the shares/bonds correlation coming down, does that imply the 60/40 paradigm is again? I’ve my doubts.”
Jurrien Timmer, Director of Global Macro at Fidelity Investments, on X
However, shorter 13-week readings fell or turned adverse within the 1998 development scare tied to hedge fund Long-Term Capital Management (LTCM). They did so once more within the dot-com bust and the 2025 tariff tantrum, Timmer’s label for that 12 months’s selloff. The five-year regime stayed constructive in every case.
Are Bonds Only a Hedge When Growth Scares Hit?
Recent buying and selling matches that sample. Treasuries rallied throughout October’s AI stock selloff. The 10-year yield closed under 5% on October 22, its first time since September 22.
In distinction, Ariel Investments vice chairman Charlie Bobrinskoy argues bonds are worth buying with the 10-year yielding about 5%.
Still, inflation is the swing issue. Timmer advised Morningstar in 2023 that long-run value pressures resolve whether or not bonds can shield a 60/40 combine.
Timmer’s various is a 60/20/20 combine. In a May 2025 Fidelity observe, he put alternate options, gold, Bitcoin (BTC), and money within the remaining 20%.
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