The Globe and Mail reports in its Friday edition that in the past month, events have shaken the markets, including record stock market volatility and indications of impending U.S. interest rate cuts. A Reuters dispatch to The Globe reports that bonds have shown resilience, potentially signalling a shift away from equities toward fixed income. Yields on U.S. Treasuries have been falling, with global bond funds attracting more inflows than global equity funds this year. Bank of America says global bond funds have attracted $425-billion of inflows this year, about $40-billion more than global equity funds (all figures U.S.). Investment Company Institute figures show that U.S. mutual funds' year-to-date bond inflows are currently about $315-billion, nearly four times more than equity inflows. This flight to bonds suggests that investors have been positioning for a breakout in fixed income returns that has not yet occurred. The ICE BofA Treasury index is up only 3 per cent this year while the S&P 500 is up over 15 per cent, even after the recent turbulence. So what happens if the soft landing fails to materialize and the economy tips straight into recession? History suggests equities will fall and Treasuries will rise.