# Monthly 60/40 Equilibrium
Source: https://www.yieldcurve.pro/blog/60-40-equilibrium-013  
Published: 2025-03-20  
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 March 2025 installment of a
<a href="/blog/60-40-equilibrium-001">series</a>
of posts we make to track how the weights of a paper 60/40 stock/bond
portfolio evolve intra-month.

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/22/blog_60_40_equilibrium_013.png">
#### **Figure 1**: Stock/Bond Weights For March 2025

<br />

On an absolute basis, bonds have out performed stocks by about 350 basis points.
Let's take a look at the stock-bond weightings month-to-date on a relative basis.

Stocks are about 100 basis points below average (the thick grey line) at this
point in the month based on historical data.  Based on symmetry this means that
bonds are about 100 basis points above average.  Assuming these positions are
maintained until the end of the month, this means that 60/40 funds will be net
sellers of bonds and buyers of stocks in order to restore equilibrium.

See you next month.

Cheers -- YCP