Can You Have Your Cake and Eat It, Too?

As we enter the fourth quarter, stocks are up more than 20% and the broad bond market is up around 8%. Both stocks and bonds have done well this year, which begs the question, can we really have our cake and eat it, too? Can stocks and bonds both do this well at the same time? Looking back in time for insights, the answer is “yes.” There have been years where both have done well even after adjusting for inflation. Whether stocks and bonds continue to climb together is a tougher question to answer.

To answer this question, we need to take a step back and understand what’s driving the two asset classes higher. Global economic data has been slowing and is expected to slow more based on current trends. This is supportive for bond investors as weaker growth could drive up bond prices.

The Market Outlook is published by Cetera Investment Management LLC, an SEC registered adviser owned by Cetera Financial Group. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.