Will bonds rebound with a correction?

[rerod]

I've been increasing my equities exposure over the last year but still have a ways to go. Still 20% in VFIJX and 33.6% in VBTLX
Will bonds rebound a touch if there's a market correction? For even a brief moment? Or will they and stocks skip merrily hand in hand down the same path bonds began?

[violet80907]

I'm not sure I understand the question. Bond (prices) are at all time highs, yields at all time lows. This is largely driven by QE (Quantitative Easing) here and abroad. If stocks fall, that would only tend to push people towards bonds, pushing prices higher and yields lower. But (real) yields are already negative for many short term bonds.

It seems bond prices can only go down (and yields up) from here. That, or we have to have a stock correction so severe that people really want to pay for negative real yield.

[rerod]

I'm not sure I understand the question. Bond (prices) are at all time highs, yields at all time lows. This is largely driven by QE (Quantitative Easing) here and abroad. If stocks fall, that would only tend to push people towards bonds, pushing prices higher and yields lower. But (real) yields are already negative for many short term bonds.

It seems bond prices can only go down (and yields up) from here. That, or we have to have a stock correction so severe that people really want to pay for negative real yield.

Thanks Violet

Id like to preserve my fixed income during a correction and maybe profit in an up market and made the mistake of buying allot of VBTLX 4 months ago. My VFIJX Iv held since end of 2010 has me concerned as well. I now think short term bonds like VFSTX would have been a better choice and am wondering if I should dump VFIJX and buy VFSTX for some reserve to buy low priced equities? Or should I take some loss to prevent more, and sell some/all VBTLX for VFSTX for this reserve?

17.8% VBIAX
19.5% VFIJX
11.1% VWEAX
4.2% VINEX
33.6% VBTLX
6.2% VTIAX
7.5% VTSAX


Thanks