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2026-11-04 18:50:25
[Stronger Positive Correlation Between US Stocks and Treasury Yields After Democrats Win Both Houses] ⑴ Investors are assessing the impact of the Democrats' victory in both houses of Congress on Tuesday and their landslide wins in Republican strongholds. ⑵ Deutsche Bank's US strategists believe this will have a significant political impact over the next few years, but less so on policy and fiscal policy. ⑶ However, they point out a strong positive correlation between the S&P 500 and the 10-year Treasury yield in post-election trends. ⑷ They state that historical experience shows a 2% drop in the stock market in the coming week corresponds to a roughly 10 basis point drop in the 10-year yield. ⑸ The one-month rolling correlation reached 0.86 on Wednesday, the most positive level since April 2022, indicating that bond yields and the stock market are more likely to move in tandem rather than inversely. ⑹ US stock index futures rose about 0.70%, after the benchmark index rose 0.36% to 0.8% on Tuesday, while US Treasury yields fell 2 basis points, after rising nearly 6 basis points on Tuesday. ⑺ RBC BlueBay's head of market strategy, Bell, said the market is unlikely to be significantly impacted by this outcome. (8) Bell stated that the president could veto any Democratic policy, and that the Democrats did not have enough seats to initiate impeachment proceedings.
