Stock-yield correlation hits lowest level since 1999

[Trading charts background]
da-kuk/E+ via Getty Images

The relationship between stocks (SP500 [https://seekingalpha.com/symbol/SP500]) and bond yields (US10Y [https://seekingalpha.com/symbol/US10Y]) is flashing a rare warning signal that hasn’t been seen in over 25 years, according to recent data shared by Schwab strategist Kevin Gordon.

The rolling 30-day correlation between the S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]) and the 10-year Treasury yield (US10Y [https://seekingalpha.com/symbol/US10Y]) has plunged to about minus 0.68—its lowest reading since September 1999, around the peak of the dot-com boom, Gordon pointed out in a social media post.

This sharply negative correlation comes as equities and long-term yields have been moving in opposite directions [https://seekingalpha.com/symbol/SP500/charting?compare=US10Y%2CSP500&interval=1M] in recent days, as growing inflation worries ripple across markets. The 10-year tenor (US10Y [https://seekingalpha.com/symbol/US10Y]) was up roughly 20 basis points, and the S&P (SP500 [https://seekingalpha.com/symbol/SP500]) was down nearly 2% over the past five trading sessions as of the time of writing on Tuesday.
[Kevin Gordon]
Kevin Gordon

MORE ON THE MARKETS

* Rising Misery Index Signals Mounting Economic Pressure [https://seekingalpha.com/article/4906501-rising-misery-index-signals-mounting-economic-pressure]
* Buy TLT And EDV [https://seekingalpha.com/article/4906476-buy-tlt-edv]
* Cracks Forming Within The AI Narrative Powering The Market Rally [https://seekingalpha.com/article/4906454-cracks-forming-within-ai-narrative-powering-market-rally]
* S&P 500’s strongest trading days historically cluster around market downturns [https://seekingalpha.com/news/4594936-s-and-p-500-s-strongest-trading-days-historically-cluster-around-market-downturns]
* Fund managers turn sharply more bearish on bonds - BofA [https://seekingalpha.com/news/4594934-fund-managers-turn-sharply-more-bearish-on-bonds---bofa]