An Interesting New Correlation Emerges Between Stocks And Bonds

Something to watch: Basically for the last week or so, there’s been a positive correlation between stocks and bonds, a phenomenon that was not at all the case up until recently, when stocks would go down on days that bonds would really.

The correlation isn’t been that tight, but compared to the previous inverse correlation it’s noteworthy.

We’re seeing it again today. Stocks are on fire, and bond prices (the chart below is of 10-year bond futures) are up nicely as well.

You almost have to wonder: Is the Treasury market starting to price in some default risk that causes underlying prices to move up when things go “RISK ON”?


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