And by examining data as far back as 1801 it shows that inflation, real rates and government creditworthiness are important explanatory variables of the stock bond correlation. The question is if we are in this environment, as IMCO says, inflation could be structurally higher and that will mean an environment of higher stock bond correlation, which will have a big impact on the risk of a diversified portfolio.” “If the stock bond correlation keeps going in the same direction, being positive, then probably returns on bonds will decline as investors ask for higher bond risk premia and therefore higher yields.”