Short-term stocks and bond yield correlations

Sources: Bloomberg and Wells Fargo Investment Institute. Daily data from January 1, 2018 to March 31, 2022. Yields represent past performance and fluctuate with market conditions. Current yields may be higher or lower than those quoted above. The S&P 500 Index is a market-capitalization-weighted index considered representative of the U.S. stock market. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results.

Key Takeaways

  • A rising yield environment, like the one we are anticipating, could signify that bond investors have a positive outlook on future economic growth, which may also be a positive sign for the stock market. In this case, a positive correlation between stock prices and bond yields would be reasonable.
  • Since 2018, the 10-year Treasury yield and the S&P 500 Index mostly exhibited same-direction moves (positive correlation).