Bonds Are Losing Their Role as the Portfolio Airbag

Of the 32 swap markets tracked by Bloomberg, roughly two-thirds are now pricing in rate hikes. Traders see about 400 basis points of tightening across the seven largest markets over the next year, led by South Korea at more than 100 basis points.
When central banks tighten at the same time, bonds can fall alongside stocks instead of cushioning a portfolio. Korean government debt is already down 9% this year, while Japan is down 4%.
That puts the traditional 60/40 portfolio under pressure and leaves cash as one of the few assets still paying investors to wait.