Stocks-Bonds Correlation Hits Most Negative Since 1999

The 90-day correlation between 10-year Treasury yields and the S&P 500 has dropped to -0.48, its lowest since 1999. This negative reading indicates that recently, rising yields have been associated with weaker stock performance, while declining yields have lent support to equities.

The current figure surpasses the -0.42 mark seen during the 2022 bear market low. For more than a decade before the 2020 pandemic, the correlation was positive: yields and stocks often rose together as higher rates reflected stronger economic growth.

Now, investors appear to interpret climbing yields less as a signal of economic strength and more as a consequence of inflation uncertainty and fiscal concerns. The focus remains squarely on the bond market.