One of the catalysts behind Thursdays heavy stock selling was the breakdown in Treasury bond yields. The 10-Year T-note yield fell below its July low to the lowest level in more than four months. Bond yields are an indicator of confidence in the economy. When investors are optimistic, they buy stocks and sell Treasuries. That pushes bond yields higher. When they're more pessimistic, they sell stocks and buy Treasuries. That pushes yields lower. So the direction of Treasury bond yields has some bearing on the direction of stocks. That's been especially true over the last two years. The weekly bars in Chart 1 compare the trend of the 10 Year Treasury Note Yield (TNX) to the S&P 500 (green line). At least two things are apparent. One is that bond yields and stocks have usually trended in the same direction. The second is that bond yields have tended to change direction first. Bond yields started dropping during the summer of 2007 several months before stocks peaked. Bond yields started bouncing at the start of 2008 and anticipated a stock rebound that spring. After falling together during the second half of last year, bond yields turned up several months before stocks. Chart 2 shows bond yields turning up in January of this year two months before stocks' March bottom. Bond yields peaked in June, however, and have been weakening since then while stock prices have risen. That "negative intermarket divergence" grew more serious with yesterday's breakdown in yields.
i dont' agree with $tyn leads $spx.
$tyn down, means lower inflation, long run will benefit stock market.
on the other hand, i think that bond market is leading stock market, not bond yield. A strong bond market means a strong $usd, lower inflation. A bond market crash normally will lead to a major stock market crash by months to years early, like 1987.
i dont' agree with $tyn leads $spx.
$tyn down, means lower inflation, long run will benefit stock market.
on the other hand, i think that bond market is leading stock market, not bond yield. A stron ...
hometh 发表于 2009-10-5 18:01
During 1970s to 1980s, bond and stock has positive relationship, but they have negative correlation during recent years. I don't have a chart for 70s and 80s, can you post one if you have the spx and tbond chart at that time?
yes, i do mean a strong bond market = a lower bond yield.
Mostly, the bond vs stock is no useful for mid-term trading for me. When the econ cycle changes, the long term trend for bond/stock changes. What's how i think the relationship works.
During 1970 to 1985, bond and stock has positive relationship, but they have negative correlation during recent years. I don't have a chart for 70s and 80s, can you post one if you have the spx and tb ...
wisgo 发表于 2009-10-5 19:36
狗仔卡
发表于 2009-10-4 12:16 PM
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发表于 2009-10-4 12:53 PM
