# Monthly 60/40 Equilibrium
Source: https://www.yieldcurve.pro/blog/60-40-equilibrium-002  
Published: 2024-01-17  
Tags: 60/40, Bonds, ETFs, SPY, Stocks, TLT, noindex

_What do current market movements in stocks and bonds have to say about 60/40 fund weights?_

# What do current market movements in stocks and bonds have to say about 60/40 fund weights?

<br />

This is January 2024 installment of a series of post we make to track how the
weights of a synthetic 60/40 stock/bond portfolio evolve intra-month.  Find
last month's post
<a href="/blog/60-40-equilibrium-001">here</a>.

Each month we coduct a simple experiment:  track the cumulative intra-month
return of two stock/bond indices (say SPY and TLT).  Next, combine that data to
estimate a one standard deviation envelope of weights as a function of the days
in the month.  Then measure, for the day of the month, where the current
weights sit within those envelopes.  This provides a measure of how much a
typical 60/40 fund needs to move in order to restore equilibrium.

Figure 1 depicts the envelopes and current weights for SPY and TLT.

<br />

<img src="/admin/blog/image/61/blog_60_40_equilibrium_002.png">
#### **Figure 1**: Stock/Bond Weights For January 2024

<br />

Current deviations imply that, as of today, 60/40 funds would be sellers of
stocks and buyers of bonds with moves of just over 50 basis points to restore
equilibrium.