Softer than expected U.S. inflation data buoyed investors’ faith that twin rebounds in stocks and bonds will persist in a year of deep losses for both asset classes.
Bear markets in both have maximized losses in portfolios this year as rate hikes from the Federal Reserve sapped appetite for risk; and some investors have met recent rebounds in stocks and bonds with skepticism.
The S&P 500 is now up about 15% from its mid-June lows, though still down 12% year-to-date; while the Nasdaq is up more than 20% from its lows. Ten-year Treasury yields, which move inversely to prices, have fallen about 70 basis points from their June peak.
The Consumer Price Index was unchanged last month after advancing 1.3% in June, the Labor Department said.
Doty said he was increasing his exposure to longer-dated bonds in his portfolio; betting that yields are unlikely to revisit the highs they have seen this year.