The title of this week’s note is simple. The inspiration for it is the second chart in the note. Those who have been following us for the past few years will recognize it. For everyone else, we want to introduce the idea that bonds are not always the best diversifier for equity exposure.
Meanwhile, hard assets are beginning to turn higher.
This week, we build on the theme introduced in last week’s note.
S&P 500 and NASDAQ 100
Starting with equities, last week was a “meh” week. There was some weakness, yes, but not enough to change the bullish trend we have been highlighting for months.
Both the S&P 500 and NASDAQ 100 remain near record levels and above rising 60-week moving averages.
Source: Optuma
Stock-Bond Correlation
This is the most important chart in the note this week.
It is one we have been discussing since 2022. The key takeaway is that stocks and bonds are moving together. As they do, bonds become less effective as diversifiers for equity exposure.
The one-year correlation is now at its highest level of 2026. The five-year correlation has been steadily rising since the fourth quarter of 2023.
Many strategic portfolios still pair stocks and bonds under the assumption that one offsets the other. Does that assumption still make sense if the two assets are increasingly moving in the same direction?
Source: Optuma
Commodities
Enter commodities, the long-forgotten third asset class.
The iShares S&P GSCI Commodity-Indexed Trust (GSG) has rallied back to the highs from 2013-2014 and continues to trade above its rising 40-week moving average.
Remember, it’s not just stocks and bonds. It’s stocks, bonds, and commodities.
Source: Optuma
Gold and Silver
Meanwhile, after correcting through much of 2026, gold and silver are beginning to turn the corner.
Both have reclaimed their 50-day moving averages, which have shifted from declining to flat. Gold has regained its 200-day moving average, while silver is now challenging its 200-day moving average from below.
The trend is improving.
Source: Optuma
Bitcoin
Some argue that Bitcoin is the ultimate hard asset. Determining whether that is actually true is well beyond the scope of what we do here.
Besides, we don't do narratives, and that sounds like a narrative.
What we do know is that Bitcoin has rallied sharply over the past week, enough to push our momentum model back into positive territory. Momentum had been deteriorating since early 2026, so that is a notable change.
Source: Optuma
Final Thoughts
We have been advocating for years that static allocations to any asset class do not make much sense. That is especially true for the assets investors use to diversify their equity exposure.
From 2000 through 2022, bonds were outstanding diversifiers. That does not mean they always will be. Correlations change. Markets evolve.
Today, stocks remain bullish. Bonds remain stuck in neutral. Meanwhile, hard assets are beginning to wake up.
Investors have been conditioned to think in terms of stocks and bonds. The evidence increasingly suggests it may be time to think in terms of stocks, bonds, and commodities.
And within that commodity bucket, the hard assets are starting to make their move.
