Prescient says expensive oil historically signals lower US 10-year yields over next year
TLT•Prescient flags historical link between expensive oil and lower 10-year yields
Prescient says expensive Brent oil has historically tended to precede lower US 10-year yields over the next 12 months.
- In the priciest fifth of months, US 10-year yields fell 28 basis points on average; in the cheapest fifth, yields rose 20.
- When oil was more than 1.5 standard deviations above trend, 10-year yields were lower a year later 65% of the time.
- The study attributed the effect to oil mean reversion and a growth hit from high energy costs, supporting longer-duration positioning.
- The report cited February 2022 as a key exception, when an oil spike coincided with 10-year yields rising more than 200 basis points.
