Board of Governors of the Federal Reserve System

Figure 1. Stock and Bond Returns in March 2026

Figure 2. Stock-Bond Correlations

What the figure shows: A line chart of the one-year (252 trading day) rolling correlation between daily stock returns and daily changes in the 10-year government bond yield for the United States (S&P 500), the Euro Area (Euro Stoxx and German 10-year yield), and the United Kingdom (FTSE 100), plotted daily from September 1990 through July 2026. The vertical axis runs from -0.8 to 0.8, with a horizontal reference line at zero. A positive correlation means stock prices and bond yields move together (bond prices fall when stocks fall, so bonds are a good hedge); a negative correlation means they move in opposite directions. Three shaded regions mark the historical periods: the left shaded area covers 1990 to 1999, the middle shaded area covers 2000 to 2021, and the right shaded area covers 2022 to the end of the sample.

Overall pattern: The three countries move closely together. Correlations are deeply negative in the 1990s, turn positive around 2000 and stay positive for most of the two decades through the Covid pandemic, and then fall back to around zero or below after 2021.

Left shaded period (1990-1999): All three correlations are negative for most of the decade, averaging about -0.33 for the U.S., -0.36 for the Euro Area, and -0.34 for the U.K. They are deepest in the mid-1990s, reaching about -0.67 for the U.S. (November 1994), -0.59 for the Euro Area, and -0.62 for the U.K. The correlations rise sharply in 1998 and briefly turn positive in 1998-1999, peaking near 0.43 for the U.S. in October 1998.

Middle shaded period (2000-2021): After dipping to about -0.2 in early 2000, all three correlations turn positive and stay positive for most of the period, averaging about 0.33 for the U.S., 0.34 for the Euro Area, and 0.26 for the U.K. Peaks occur around 2003 (about 0.7) and during 2008-2012, when the correlations reach their sample highs: about 0.71 for the U.S. (July 2012), 0.76 for the Euro Area (November 2011), and 0.64 for the U.K. (November 2011). Brief dips to near or slightly below zero occur around 2006-2007 for the U.S. and around 2014 and 2018 for the U.K. The U.S. correlation rises to about 0.6 in 2020 before falling toward zero in late 2021.

Right shaded period (2022 onward): Correlations fall to around zero and fluctuate between roughly -0.3 and 0.3 for most of the period, averaging about -0.05 for the U.S., 0.03 for the Euro Area, and -0.12 for the U.K. In 2026 the Euro Area and U.K. correlations drop sharply; at the end of the sample (July 31, 2026) they are about -0.21 for the U.S., -0.50 for the Euro Area, and -0.60 for the U.K., the lowest readings since the 1990s.

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Figure 3. One-Year Ahead Inflation Expectations

What the figure shows: A line chart of one-year-ahead expected consumer price inflation, in percent, for the United States, the Euro Area (Germany), and the United Kingdom. Values come from the Consensus Economics survey of professional forecasters and are plotted at each survey release (semi-annual from 1990 through about 2014, quarterly thereafter). The United Kingdom line is on a CPI-equivalent basis: the Consensus CPI survey is used from 2004Q2 onward, and earlier years are converted from the RPI survey by subtracting the mean RPI-minus-CPI wedge. A horizontal reference line marks the 2 percent inflation target.

Data source and licensing: The underlying series are proprietary Consensus Economics survey data. Under the data license they cannot be redistributed, so this accessibility sheet describes the figure instead of listing the values.

Overall pattern: One-year expectations start elevated in the early 1990s, drift down and settle into a narrow, well-anchored range close to 2 percent through the 2000s and 2010s, spike sharply during the 2021-2022 inflation surge, and then fall back toward 2 percent by 2024-2026. All three countries move together, but the size of the 2021-2022 spike differs markedly across them.

Early 1990s to 2019: In 1990 the U.S. line begins near 4.4 percent, Germany near 3.3 percent, and the U.K. near 4.7 percent. All three decline over the 1990s and, from roughly 2000 through 2019, stay in a subdued band: the U.S. mostly between about 2 and 3 percent, Germany lower (dipping to about 0.9 percent at its 2009 trough), and the U.K. generally the highest of the three. The Euro Area/Germany series reaches its sample low near 0.9 percent around 2009-2010 and the U.S. its low near 1.5 percent around 2010.

The 2021-2022 surge and peak: All three lines rise steeply beginning in 2021 and peak in 2022, with the highest readings in the fourth quarter of 2022. At that peak the Euro Area (Germany) is highest at about 6.8 percent, the U.K. (CPI-equivalent) close behind at about 6.4 percent, and the U.S. lower at about 3.9 percent. These are the largest values in the series, and the Euro Area figure of roughly 6.8 percent is the overall sample maximum.

Decline and recent readings: After the 2022 peak, all three lines fall steadily back toward the 2 percent target. By the most recent survey (2026Q2) the U.S. is about 2.4 percent, the Euro Area (Germany) about 2.2 percent, and the U.K. (CPI-equivalent) about 2.5 percent — close to, but still modestly above, 2 percent.

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Figure 4. Six-to-Ten-Year Ahead Inflation Expectations

What the figure shows: A line chart of six-to-ten-year-ahead (long-run) expected consumer price inflation, in percent, for the United States, the Euro Area (Germany), and the United Kingdom. Values come from the Consensus Economics survey of professional forecasters and are plotted at each survey release (semi-annual from 1990 through about 2014, quarterly thereafter). The United Kingdom line is on a CPI-equivalent basis: the Consensus CPI survey is used from 2004Q2 onward, and earlier years are converted from the RPI survey by subtracting the mean RPI-minus-CPI wedge. A horizontal reference line marks the 2 percent inflation target.

Data source and licensing: The underlying series are proprietary Consensus Economics survey data. Under the data license they cannot be redistributed, so this accessibility sheet describes the figure instead of listing the values.

Overall pattern: The defining feature of this figure is stability. Long-run inflation expectations start modestly higher in the early 1990s, decline over that decade, and from 2000 onward stay within about 1 percentage point of the 2 percent target, converging to a very narrow range near 2 to 2.3 percent in recent years. Crucially, unlike the one-year expectations in Figure 3, these long-run expectations barely move during the 2021-2022 inflation surge — they remain close to 2 percent throughout, indicating that long-run expectations stayed well anchored even as near-term inflation spiked.

Levels and ranges: In 1990 the U.S. line begins near 4.3 percent (its sample high), Germany near 2.7 percent, and the U.K. near 3.6 percent (its sample high). All three decline over the 1990s. From the 2000s onward they stay within about 1 percentage point of 2 percent: the U.S. ranges between about 2.1 and 2.7 percent, Germany between about 1.5 percent (low near 2004) and 2.2 percent, and the U.K. (CPI-equivalent) between about 1.2 percent (low near 2003) and 2.9 percent (high near 2012). The three lines converge after about 2015.

Through the 2022 surge and recent readings: During 2022-2023, when one-year expectations spiked to multi-decade highs, the six-to-ten-year lines stayed between about 2.0 and 2.3 percent with only small movements. By the most recent survey (2026Q2) the U.S. is about 2.3 percent, the Euro Area (Germany) about 2.0 percent, and the U.K. (CPI-equivalent) about 2.2 percent — essentially at the 2 percent target.

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