Do stock markets inevitably fall when yields rise? ☑️ The relationship between TNX (10-year US Treasury yield) and SPX (S&P 500) is not simply inverse; their correlation depends on the dominant economic driver. 1⃣ Periods of inflation and tightening (negative correlation): When the Federal Reserve raises rates to curb inflation, a surge in TNX increases corporate borrowing costs and lowers the discounted future value of high-growth tech stocks. The increased attractiveness of risk-free returns draws capital out of the stock market, causing SPX to fall as TNX rises. 2⃣ Periods of economic recovery (positive correlation): Strong economic growth boosts corporate earnings expectations, driving SPX up; simultaneously, market expectations for moderate inflation and increased capital demand push TNX higher. In this scenario, rising yields signal a healthy economy, and both assets rise together. ☑️ Historical data shows that over the long term (spanning decades), the overall linear correlation coefficient between TNX and SPX is approximately -0.26, indicating a weak negative correlation. Assessing the stock-bond relationship requires avoiding a rigid, one-size-fits-all mindset. The key factor determining the direction of the SPX is whether the rise in TNX is driven by "inflation and rate hikes" or by "economic growth." #SPX #TNX #tradeing #US #stockmarket