Treasury-stock correlation has inverted to -0.48, its most negative level since 1999, signaling investor concern about inflation and fiscal stability rather than economic strength.
Macro & Markets ·
The 90-day correlation between the 10-year Treasury yield and the S&P 500 has fallen to -0.48, its lowest level since 1999, surpassing the -0.42 reading seen during the 2022 bear market. Rising Treasury yields are now associated with weaker stock performance, reversing the positive correlation that prevailed for more than a decade before 2020, when higher yields typically reflected economic strength. The current inversion suggests investors interpret yield increases as reflecting inflation and fiscal concerns rather than robust growth, marking a fundamental shift in how markets price the relationship between bond and equity valuations.