So much for all the talk about a 'great rotation' out of bond markets into equities this year, analysts now say the best strategy may be to keep hold of both types of assets given mixed signals for the world economy.
"Isn't it interesting that people were talking about deserting the bond market because of a possible end to QE (quantitative easing), and the bond market is where it's performing, believe it or not, right now," said Yu-Dee Chang, chief advisor at ACE Investment Strategists. "Rates remain low, thus bonds are doing well."
Benchmark 10-year Treasury yields hit a four-month low on Wednesday around 1.61 percent. In the euro zone, 10-year yields are trading at their lowest since last July and Japanese government debt yields are trading at their lowest in about a month.
Given recent softer-than-expected data out of the U.S. and China, expectations for an imminent cut in euro zone interest rates and a clear signal from the Federal Reserve that it's in no rush to end its ultra-loose monetary policy, there's little wonder that the bond market is back in play after playing second fiddle to a booming stock market earlier this year.
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What is unusual, say analysts, is that those gains come as equity markets globally remain at relatively strong levels. Take a look at the S&P 500 for instance – it closed 1 percent lower overnight but is still close to all-time highs.
"When you think back, at times of uncertainty, which is where we are right now, diversification is the way to go. And right now owning anything of significance really means owning stocks and bonds," Chang told CNBC's "Asia Squawk Box." "You're not really going to diversify into gold, which is still a little too volatile for me. So you want to diversify between stocks and bonds."