The daily correlation between the S&P 500 and the 10-year Treasury yield is close to zero. The latest reading on Bloomberg’s rolling correlation chart is just 0.0766, almost right on the zero line. This indicator ranges from -1 to 1. The closer it is to zero, the weaker the link between their daily moves. A negative reading represents the “inverse relationship” between bond and stock prices, where yields rise as the stock index falls; a positive reading means they move in the same direction. For most of the past, it was in negative territory, at one point reaching close to -0.8. Back then, when yields rose, growth stocks facing valuation pressure were often the first to fall, pulling the S&P lower; when yields fell, the index tended to recover, and the old script of bond and stock prices moving in tandem played out again and again. Take the inflation shock of 2022, for example: the 10-year yield surged, putting the Nasdaq and long-duration growth stocks under pressure first, while the S&P 500 also suffered a sharp pullback. Interest rates had become almost the master switch for valuations.

Now, 0.0766 means that this relationship has temporarily loosened: yields can move without the stock index necessarily following. For example, in one week the 10-year yield could rise 10 basis points while the S&P slips just 0.1%, or even recovers on the back of earnings expectations and the AI capex narrative. The next week, yields could fall, and the index still might not rebound right away. Capital is looking for a new anchor, and earnings revisions, liquidity, credit spreads, the dollar, and commodities could all temporarily take over as drivers of pricing. For example, when AI capex and earnings upgrades from leading companies are strong enough, they can partly offset the valuation pressure from rising rates; when credit spreads widen or the dollar strengthens rapidly, the stock index may not respond even if yields fall. I’m used to watching candlestick charts, and at times like this, what I fear most is forcing an old framework onto the market and mechanically translating every move in yields into a direction for stocks. A correlation near zero doesn’t mean there’s no signal; it means the signal has changed channels. I hope I’m wrong this time—being wrong would mean the old rules still hold and the market still makes sense.