Feb 10, 02:53 PM

Stock-Bond Correlation Turns Negative as $TLT Short Interest Hits Record $9 Billion; $TLT Declines 40%

Recent analyses indicate a notable shift in the stock-bond correlation, which has transitioned from a positive to a negative correlation. This change suggests that stock and bond prices are now moving in opposite directions, potentially reducing overall portfolio volatility. The 3-month correlation between the S&P 500 and the 10-year yield is decreasing, indicating that bonds may regain their role as a hedge in investment portfolios. Additionally, short interest in the ETF for 20+ year U.S. government bonds, represented by $TLT, has surged to a record $9 billion, tripling over the past two years. This increase in short interest coincides with a roughly 40% decline in $TLT since the 2020 crisis, raising questions about whether this presents a rare buying opportunity for bonds.

Written with ChatGPT (GPT-4o mini).

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Stock-Bond Correlation Turns Negative as $TLT Short Interest Hits Record $9 Billion; $TLT Declines 40%

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