One of the many notable things about the beating under way in US stock markets is that US government bonds are not really picking up the slack. This is not a good sign.

Treasuries are typically the yin to stocks’ yang. When stocks take a hit, bonds generally jump as investors flock to safer shores. They are known as the “risk-free” asset after all. This is a mechanism that has helped many a diversified portfolio over the decades, with only rare exceptions. 

In this month’s rapid stock market shakeout, however, the balancing act is not quite working out. US stocks are being monstered, down 5 per cent this month so far, and we are only halfway through March. We’re down 8 per cent since mid-February. At the same time, bond prices have picked up over the course of this year, but not dramatically so. Crucially, benchmark 10-year US government bonds are at roughly the same level now as they were at the end of last month.