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Treasuries up, oil up?




This chart compares the yield on 10-yr Treasuries to the price of crude oil futures contracts. The two have been moving in tandem (correlation 0.92) for awhile now, but today's action caught my attention: crude is up sharply, while yields are down (and bond prices are up). That the two should move together makes sense, since both have been driven of late by perceptions of the economy's strength: a weaker economy calls for lower yields and less demand for oil, and thus a lower oil price. What to make of the opposite moves today? I'm tempted to think that Treasury yields today have zigged when they should have zagged.

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