After today's weaker ISM Manufacturing PMI (a drop from 49.2 to 48.7, with an increase to 49.6 expected), we have quite a strong reaction to oil prices (WIT falls 3.8% today.., btw.. good luck to OPEC+ with their exit strategy of production cuts).
Bond yields are also falling significantly today (10Y UST is down 11 bps). The dollar weakened meaningfully (the dollar index is down 0.54%; and the EURUSD is up +0.46%).
The S&P500 closes the day practically flat (but Nvidia is up 4.8%... definitely after good weekend news from Taiwan).
But is the falling oil price somehow leading tumbling yields? – see Figure 1.
This may not be a perfect correlation, but recently oil prices seem to be ahead of rates.. Figure 2 shows the same, but in a longer time frame.... Except for the second half of 2022 (rising yields, falling oil prices), the relationship is quite significant in the medium term.
Figure 3 shows an even longer time horizon, starting from 2015. Falling oil price certainly needs to be watched and may contribute to falling bond yields.
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