Financial markets across the globe are moving together the most in two decades, in a world where little else matters but the pandemic-driven economic trajectory and Federal Reserve stimulus.

One-year correlations across 30 assets, including convertible bonds, commodities and emerging-market shares, are spiking and upending diversification strategies for investors of all stripes, according to JPMorgan Chase & Co. analysis.

It all signals little retreat from the macro-driven markets of March.

As the virus jolts corporate earnings, policy makers unleash rescue packages and traders move money on the same macro headlines, securities continue to rise and fall in lockstep, both within and across assets.

This week is a case in point. The S&P 500 has jumped along with credit markets as the Federal Reserve announced it will start buying individual corporate bonds -- pushing movements between the two asset classes closer in levels unseen since 2006.

“Many assets are responding to the same primary driver: liquidity,” said Abi Oladimeji, chief investment officer at Thomas Miller Investment in London. “This makes the task of creating truly diversified portfolios more challenging because hitherto different assets classes suddenly represent exposure to the same risk factors.”

Another way of the thinking about the allocation headache is by slicing and dicing market gyrations through Evercore ISI’s quant model.

The analysis shows macro risks -- including credit spreads and the dollar -- are now accounting for the largest portion of the S&P 500’s returns in at least 14 years. That means securities are largely trading on broader economic factors rather than on the basis of earnings or corporate news.

Explaining why is relatively easy. Correlations are typically high at turning points in the business cycle as extreme positioning and changes in liquidity drive indiscriminate selling followed by dip-buying across the board, according to John Normand, head of cross-asset fundamental strategy at JPMorgan.

The harder part is guessing what hedges will prove reliable for the likes of active real-money investors going forward.

With government bond yields already near or below zero across the developed world, high-grade corporate debt could increasingly benefit when things go sour as it becomes the go-to market for Fed buying, according to Normand.

At the very least, the correlation between American investment-grade credit and the S&P 500 is no longer reliably negative, reaching the highest since 2006 last week.

“In a low U.S. Treasury yield environment the Fed could influence financial conditions more by buying credit than by buying U.S. Treasuries,” Normand wrote in an email. “The historically negative correlation between credit spreads and equity prices could decline going forward.”

This article was provided by Bloomberg News.