Stocks Rallied as Treasury Yields Fell. Don’t Get Used to It.

It’s the middle of earnings season, but the Treasury market is doing more to move the stock market than any company fundamentals.

Stocks have had a wild ride in recent months—but it’s nothing compared with what has happened in bonds. From 3.95% at the end of June, the 10-year U.S. Treasury yield surged to nearly 5% by mid-October, a payout level not seen in 16 years. Buyers swooped in—it’s a nice round number, after all—and by Nov. 3, the yield had dropped to 4.52%. The stock market followed along. The
S&P 500 index
fell 10% from the end of July through late October, and has since risen 75%.