Highly relevant! "Government Bonds’ Safe-Haven Property and Inflationary Pressures" by Canlin Li and Emre Yoldas. "Our analysis shows that government bonds' hedging property depends critically on the inflation environment and the types of economic shocks hitting the economy. When inflationary pressures are limited and inflation expectations are well-anchored, bonds provide reliable hedging because central banks can ease in response to both adverse demand and supply shocks that weigh on stocks. This was the typical experience during the GFC and its aftermath, which solidified bonds' safe-haven role. However, when inflationary pressures build up, such as following the Covid pandemic, the required monetary policy response changes; central banks must balance supporting real activity against their price stability objectives, which breaks the traditional flight-to-quality dynamics. In addition, adverse supply shocks may lead investors to expect tighter monetary policy as central banks seek to keep inflation expectations stable. The result is again a deterioration in bonds' hedging property. Our analysis of historical evolution of stock-bond correlations in relation to inflation regimes and different responses of asset prices to inflation news over time support these conjectures. The post 2021 deterioration in bonds' hedging property largely reflects this shift in the economic environment, not necessarily a fundamental change in bond characteristics. If inflationary pressures abate and the frequency of adverse supply shocks declines, bonds' hedging property is likely to improve." federalreserve.gov/econres/n…