18 September 2025
When bond and equity indices stop moving opposite each other
The textbook stock-bond offset is a regime, not a law. Stress windows tell you when it failed.
Many multi-asset policies still assume that government-bond benchmarks cushion equity drawdowns. That relationship has held in some decades and snapped in others — notably when inflation surprises and rate volatility dominate.
Treat the offset as conditional
In our cross-market stress briefings we place equity indices beside the relevant bond benchmark for the same stress weeks the equity story uses. If both fell together, the policy narrative needs an update, not a longer average.
A London desk habit
Before annual policy renewals, re-run the equity–bond pair over the last two inflation-led episodes your committee remembers. Bring those two figures to the meeting. Leave the thirty-year average in the appendix.