The chart shows the remarkable inverse correlation between the US 10-year bond yield and the Sensex in the last one year.
Graphic by Prajakta Patil/Mint
The sell-off in the markets has been linked to rising yields in Germany and the US. Markets have been worried about the US Federal Reserve raising rates and it now seems the US bond markets will price in a rate hike soon. The upshot has been another tantrum in the markets, much like the taper tantrum almost a couple of years ago, when the slowing of bond purchases by the US Fed was first mooted.
The chart shows the remarkable inverse correlation between the US 10-year bond yield and the Sensex in the last one year. Note that the general trend is for the Sensex to go up when the treasury yield falls and vice versa.
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