US indices correlation and US10y yield.
Highlighted marks when 10y is in positive correlation.
Most clearly recently since 10y made a H&S and came down.
Rut has tightly correlated and followed 10y to new lows, while Nas has ripped (although the direction of moves in Nas uptrend has correlated.)
Tech is in many ways a long duration bond- so should follow 10y notes and be inverse from yield.
Rut is more recession sensitive small caps and the recent rally in 10y notes has been a 'buy bonds recession is coming' narrative?
Note also the times when a change in trends are about to occur are when you get a breakdown in correlation between indices with some turning down and some making marginal new highs- this is a good divergence to watch for.
(This also works for 2, 5, 10 y yields and between yields and indices.)
Most clearly recently since 10y made a H&S and came down.
Rut has tightly correlated and followed 10y to new lows, while Nas has ripped (although the direction of moves in Nas uptrend has correlated.)
Tech is in many ways a long duration bond- so should follow 10y notes and be inverse from yield.
Rut is more recession sensitive small caps and the recent rally in 10y notes has been a 'buy bonds recession is coming' narrative?
Note also the times when a change in trends are about to occur are when you get a breakdown in correlation between indices with some turning down and some making marginal new highs- this is a good divergence to watch for.
(This also works for 2, 5, 10 y yields and between yields and indices.)
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