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The Relationship Between Stocks and Bonds

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Bond prices have an inverse relationship with interest rates. As bond prices rise, yields will fall. Typically this is bullish for stocks as investors move to the equity markets to look for better returns. In this situation the stocks and bond markets generally trend in line with one another.

In a deflationary situation, this situation is reversed and stocks and bond prices move inversely.

Bond futures can be used as a leading indicator for the stock market.

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Categories Articles, Stocks | Tags: Intermarket Analysis

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