# Monthly 60/40 Equilibrium
Source: https://www.yieldcurve.pro/blog/60-40-equilibrium-003  
Published: 2024-02-16  
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 the February 2024 installment of a series of posts we make to track how
the weights of a synthetic 60/40 stock/bond portfolio evolve intra-month.  Our
last post is
<a href="/blog/60-40-equilibrium-002">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 where the current weights sit within the envelope.
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/77/blog_60_40_equilibrium_003.png">
#### **Figure 1**: Stock/Bond Weights For February 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 150 basis points to restore
equilibrium.  Relative to history, stocks and bonds are over one standard
deviation out of balance.