Many thought leaders have prophesied the Great Rotation, i.e. the relative value asset allocation shift from bonds into stocks, ever since the economy started to recover after the Credit Crisis in 2008/09. All of those calls have been false starts since bonds continued their decades-long bull market through this September.
However, there is no denying that the total return profiles for stocks versus bonds have been quite dramatic since September 30.
As seen from the chart below, the S&P 500 has continued it tear into record territory while core bonds and other fixed income sub-sectors have given back some of the extraordinary gains earned during the first part of 2019. The S&P 500 is up just about 4% since then, but most bond classes are clustered being modestly negative to flat over that time horizon.
There are plenty of countervailing economic and capital market forces supporting this rotation. The most impactful force may simply be the easing of trade tensions (though nothing is signed yet) that could support stronger global economic growth (and increased inflationary expectations) causing longer term bond rates to rise while improved economies support higher corporate earnings growth leading to higher stock prices.
It is not (is never!) clear if there is enough underlying strength for this trend to continue; we will all know if it turned out to be THE inflection point sometime in the future. In the meantime, as mostly always, best to stay the course with a well-diversified risk-appropriate strategy.