OIL AND THE 10-YEAR ARE NOW MOVING AS ONE, TIGHTEST SINCE 2019

🔴 The correlation between crude oil and the 10-year Treasury yield just hit 0.96.

That is the tightest positive relationship since June 2019, according to BMO Capital Markets data cited by CNBC. Before 2019, you have to go back to October 2014.

What it means: oil and bonds are now moving as one. The 10-year yield briefly topped 5% Monday, the first time since October 2023, while crude surged on Middle East conflict.

CNBC reports that the tight link means an oil shock now transmits straight into financial conditions. Billy Leung of Global X ETFs said higher crude can lift inflation expectations, delay Fed easing and raise the discount rate on equities and credit at the same time. It also strips out the diversification investors normally get between commodities and government bonds.

Ed Yardeni of Yardeni Research said the chain runs from energy to inflation to bonds to Fed policy to stocks, and that continued oil strength raises the odds of two or three rate hikes rather than one and done.

Komal Sri-Kumar is already positioning for a bond bear market: short-duration fixed income, defensive equities, plus real estate, copper and gold as hedges. He said tech growth stocks are the most exposed, because their valuations lean on earnings far in the future.

Andy Lipow of Lipow Oil Associates said both moves hit the consumer directly, through gasoline, freight costs, mortgages and auto loans.

The caveat: strategists say the 0.96 reading covers a short window since the U.S.-Iran conflict began and could unwind quickly if tensions cool.

Are you moving money out of growth stocks right now, or sitting tight?

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