Oil prices and bond yields no longer moving together
Summary
The relationship between oil prices and 10-year U.S. Treasury yields has shifted sharply, with their 30-session correlation falling from 77% through Sept. 10 to about negative 10%. The change may signal that investors are more concerned about energy costs slowing economic growth than pushing inflation higher, which could give the Federal Reserve more room to avoid rate hikes.Key Facts
- Axios analyzed FactSet data on daily changes in West Texas Intermediate crude prices and 10-year Treasury yields.
- For the 30 trading days ended Sept. 10, the correlation between oil prices and Treasury yields reached 77%.
- The correlation was about negative 10% over the most recent 30 trading days cited in the article.
- When oil prices rise, bond yields have recently been more likely to fall, the article says.
- Higher energy costs can raise prices across the economy and also reduce spending by consumers and businesses.
- The article links the shift in market concerns to instability in debt markets financing the AI buildout.
- Federal Reserve Chair Kevin Warsh discussed the changing relationship between oil prices and interest rates at a news conference two weeks before the article.
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