10-Year Treasury Yield and S&P 500 Show Strongest Negative Correlation in 15 Years

The three-month correlation between the 10-year Treasury yield and the S&P 500 stands at -0.62, the lowest reading in at least 15 years. This level indicates that rising yields have coincided with falling stock prices, while falling yields have aligned with rising stock prices.

During the 2022 bear market, the same correlation never fell below -0.50. The current reading therefore represents the most negative relationship between yields and equities in decades. After the 2008 financial crisis, Treasury yields and equity prices tended to move in the same direction, supported by economic growth and earnings expectations.

Rising yields now reflect concerns over inflation rather than expectations of stronger growth. This dynamic has placed downward pressure on stock valuations. Market participants continue to monitor movements in the bond market for further signals.