Shifts in post-election US stock-bond correlations
SPY•The one-month rolling correlation between US stocks and bond yields reached 0.86 on Wednesday, around its most positive since April 2022. US stock futures rose about 0.70%, while Treasury yields fell 2 basis points.
1. Stocks and yields move together
Deutsche Bank US strategists said post-election moves in the S&P 500 and 10-year Treasury yield have a solid positive correlation. Historical experience suggests a 2% decline in equities over the next week would be associated with about a 10-basis-point drop in the 10-year yield.
2. Market moves after election
US stock futures were up about 0.70% after benchmark indexes rose between 0.36% and 0.8% on Tuesday. Treasury yields fell 2 basis points after rising nearly 6 basis points on Tuesday. RBC BlueBay’s Mike Bell said markets were less likely to be “blown around” by the result.
