Two-Decade-High Bond Yields Put the 60/40 Portfolio Back in Focus

Bond yields have reached their highest levels in more than two decades, changing the risk-reward profile of fixed income after a difficult year.
The Vanguard Total Bond Market ETF $BND is down about 6% this year while the S&P 500 remains up double digits. Lower bond prices have pushed yields higher, while stocks and bonds are moving in opposite directions again for the first time since 2021, restoring some of the diversification traditionally expected from a 60/40 portfolio.
One concentration risk remains: the 10 largest stocks now represent about 40% of the S&P 500, while 49% of new investment-grade bond issuance this year is AI-linked. Heavy AI exposure across both asset classes could weaken diversification if the same theme reverses.