Carnegie Market Blog

 

The Positive Correlation of Rates and Stocks, Uber, and Rising Death Rates.

Posted by Brent Luce on Dec 9, 2016 1:06:50 PM

Interest Rates and Stocks are Positively Correlated

Contrary to the theory we all learned in ECON 101 about the relationship between interest rates and stock prices, (watch this video for a simple overview of the theory), the longer-term correlation between stocks and interest rates has been POSITIVE for almost 20 years.  Take a look at the chart I created below.  In this chart, the top shows the S&P 500 against 10-year U.S. Treasury rates, the bottom shows the trailing 20-quarter correlation between the two.  Interestingly, there was a clear change in 1998, when stocks and interest-rates began to move more in tandem.  I would love to hear theories from the readers as to why this change occurred.   Here are a few related thoughts and observations:

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Topics: Stocks, Interest Rates, Uber, Death Rates

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