Inflation Will Hurt Both Stocks and Bonds

The longstanding negative correlation between stock and bond prices is an artifact of the low-inflation environment of the past 30 years.

Consider that any 100-basis-point increase in long-term bond yields leads to a 10% fall in the market price.

By 1982, the S&P 500 price-to-earnings ratio was eight, whereas today it is above 30. 

There are at least three options for hedging the fixed-income component of a 60/40 portfolio. The first is to invest in inflation-indexed bonds or in short-term government bonds whose yields reprice rapidly in response to higher inflation

Nouriel Roubini Project Syndicate 26 January 2022

https://www.project-syndicate.org/commentary/inflation-will-hurt-both-stocks-and-bonds-by-nouriel-roubini-2022-01

Central banks’ resolve will be tested if policy-rate hikes lead to shocks 

Nouriel Roubini Project Syndicate December 2021

https://englundmacro.blogspot.com/2022/01/central-banks-resolve-will-be-tested-if.html