Bloomberg ETF Analyst: Bonds Fail to Hedge Stock Declines Recently, Inflows into Money Market Funds and Buffer ETFs Increase

Bloomberg ETF analyst Eric Balchunas posted on platform X, stating that bonds have once again failed to hedge against stock market declines. Since SPY retreated from its June high, AGG, TLT, and LQD have all declined. Although the time window is relatively short, it bears some resemblance to the situation in 2022. He noted that many people have long relied on the 40% bond allocation in a 60/40 portfolio to hedge against the 60% equity portion, which is also the reason for the significant inflows into money market mutual funds and buffer ETFs.

He also stated that this is not to say bonds will never hedge against stocks in the end, but their recent track record is less than ideal. The Federal Reserve's long-term rate cuts once simultaneously boosted bonds and stocks, while the sudden rate hikes in 2022 caused them to fall together. Recently, rising crude oil prices have sparked inflation concerns, leading to a similar situation once again.