Oil prices and bond yields no longer moving together
Data: Axios analysis of FactSet data; Note: Correlation over preceding 30 trading sessions between daily change in West Texas Intermediate crude and change in 10-year U.S. Treasury yield; Chart: Neil Irwin/Axios For much of this year, on any given day, you could look at the price of oil and correctly guess what happened to bond yields. In the last few weeks, that correlation has evaporated. Why…
Oil prices and bond yields have been decoupling recently, indicating a shift in economic concerns. The correlation between oil prices and 10-year U.S. Treasury yields, which had been at a high of 77% in the last 30 trading sessions, has fallen to around -10%. This change suggests that growth risks may now be outweighing inflation worries as the primary economic concern.
The collapse of this correlation comes as the AI and data center boom faces growing challenges, potentially making the economy more susceptible to a slowdown due to higher energy prices. Federal Reserve officials are acknowledging this inversion of the relationship, noting that while it's uncertain, it could provide more flexibility for the central bank to adjust interest rates without compromising growth.
Written by urgent.news from Axios's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
