Timmer Questions 60/40 Portfolio Revival Amid Weakening Stock-Bond Link

Fidelity Investments’ director of global macro, Jurrien Timmer, is not convinced the 60/40 portfolio is making a return. According to his data, the five-year correlation between stocks and bonds remains above zero given the current level of Treasury yields.

The 60/40 portfolio, which holds 60% stocks and 40% bonds, depends on bonds rising when equities fall. While a dropping correlation may seem favorable, Timmer maintains that elevated yields keep the two moving together. This could leave 60/40 investors with reduced cover.

Can Yield Levels Influence the Link Between Stocks and Bonds?

The dataset compiled by Timmer monitors the relationship between the S&P 500 and long-term Treasuries across a five-year horizon. During 2013 and 2020, a period of exceptionally low yields, the correlation fell deeply into negative ground. It shifted to positive readings when yields rose.

The most recent data point, based on information up to November 2, places the correlation between 10% and 12%.

Below I highlighted a few cycles where the shorter-term correlation went down or even turned negative while the structural correlation regime was positive. The LTCM growth scare and the tariff tantrum come to mind, as well the dot com bust. You can see that the circles go from… pic.twitter.com/jNXaE6scDg

— Jurrien Timmer (@TimmerFidelity) November 4, 2026

“With the stocks/bonds correlation coming down, does that mean the 60/40 paradigm is back? I have my doubts.”

— Jurrien Timmer, Director of Global Macro at Fidelity Investments

The shorter 13-week windows, however, went into negative territory or dropped during the 1998 growth scare tied to Long-Term Capital Management (LTCM). Similar movements occurred in the dot-com bust and the 2025 tariff tantrum, Timmer's label for that year's selloff. Across all these episodes, the five-year correlation stayed positive.

Do Bonds Serve Solely as Hedges During Growth Scares?

The recent market behavior fits that pattern. Treasury securities rallied during the AI-related selloff in October. The 10-year yield closed below 5% on October 22, a level not seen since September 22.

Taking a different view, Ariel Investments vice chairman Charlie Bobrinskoy contends that bonds are worth buying with the 10-year yielding around 5%.

Nevertheless, inflation is the swing factor. Timmer told Morningstar in 2023 that long-run price pressures decide whether bonds can protect a 60/40 mix.

Timmer puts forward a 60/20/20 split as an alternative. A Fidelity note from May 2025 assigned alternatives, gold, Bitcoin (BTC), and cash to the final 20%.