September 9 2016 Market Minute
All time high for the NASDAQ Composite earlier this week, (5, 287), but couldn’t hold it for the close of the week, (5,125). Today, Friday, was an interesting day due to the Dow Jones Industrial dropping 394 points to 18,085 and bond yields rising also. Oil rebounded a little to over $45.
Today’s market was interesting because both stocks and bonds both moved in a negative direction. We have had many days this year where they were both positive for the day or week, but having such a negative day Friday was a surprise for many.
The ‘long term correlation’ between US Treasury Bonds and US Equity Indices is “Negative”. This simply means that over time, stock prices and bond prices are inversely correlated. This is one of the fundamental justifications for mixing stocks and bonds together.
Source: WSJ, Bloomberg News, Thompson One Analytics, US Bond Yields reference Sovereign 10 Year US, German, UK, France, ect.