Jurrien Timmer(@TimmerFidelity):History shows that the higher nominal yields go, the more correlated bond and equity returns become. Makes sense since the risk asset must compete against the risk-free asset. In the chart below I show the 10-year yield on the horizontal axis and the 2-year (104-week) correlation of equity and bond returns on the vertical. The size of the dots shows the 13-week correlation to highlight periods when secular regimes of positive correlations are interrupted by short bouts of negative correlations. At 5% we are currently in the “low positive” correlation regime, not unlike the late 1990’s. That suggests to me that the current growth scare (which has produced a negative 13-week correlation) will ultimately give way to the prevailing trend of positive correlation.

2026.10.30 14:10

History shows that the higher nominal yields go, the more correlated bond and equity returns become. Makes sense since the risk asset must compete against the risk-free asset. In the chart below I show the 10-year yield on the horizontal axis and the 2-year (104-week) correlation of equity and bond returns on the vertical. The size of the dots shows the 13-week correlation to highlight periods when secular regimes of positive correlations are interrupted by short bouts of negative correlations. At 5% we are currently in the “low positive” correlation regime, not unlike the late 1990’s. That suggests to me that the current growth scare (which has produced a negative 13-week correlation) will ultimately give way to the prevailing trend of positive correlation.