Stocks and bonds are declining simultaneously, breaking their traditional inverse relationship as rising oil prices, tighter monetary policy and fiscal concerns push yields higher and weigh on equity valuations. Since late last month, the KOSPI has fallen 3.8%, while the 10-year government bond yield increased by 0.1 percentage points. The pattern last appeared in April last year after U.S. President Donald Trump announced reciprocal tariffs, triggering broad selling of U.S. stocks, government bonds and the dollar. Brent crude rose 1% to $95.63 a barrel on the 2nd after U.S.-Iran tensions intensified, following a nearly 5% gain on the 1st after the U.S. resumed airstrikes on Iran. Markets have also increased expectations for further interest-rate increases: CME FedWatch put the probability of a 0.25 percentage point Federal Reserve hike in September at 68% on the 1st, while the Bank of Korea raised its base rate twice consecutively in July and August to 3%. Fiscal deficits exceeding 5 quadrillion won, greater government-bond issuance and AI-related corporate debt have added pressure to bond markets. The National Pension Service held 289.571 trillion Korean won in domestic bonds as of late May, with a -2.42% return, the only loss-making asset class in its portfolio. Rising borrowing costs could curb corporate investment, household disposable income, fiscal spending and consumption, increasing recession risks. The Korea Capital Market Institute said stagflationary pressures weaken diversification benefits, while falling international oil prices could help restore the usual relationship between stocks and bonds. Investors are watching the U.S. August jobs report on the 4th and the FOMC meeting later this month for signals on the path of rates and equities.