Major Market Correlations Between Yields, Stocks And USDollarAug 31, 2023

In 2022, the stock market took a hit and the US Dollar gained strength due to higher yields in the US. Toward the end of that year, as yields eased off, the US Dollar lost some of its power, and this coincided with a rebound in stock market performance.

Now, as yields are climbing once again, the US Dollar is regaining strength, but it seems like stocks are beginning to lose their previous momentum. However, the situation might shift if these rising yields are in the process of completing their fifth wave and are on the verge of slowing down. In that case, the US Dollar could actually become weaker again, and the stock market might continue its upward trend. Of course a lot will depend on the FED policy decisions, where dollar can turn down if FED will stop the hiking cycle. Well, a lot will depend on the US data, so market participants will surely watch the NFP very closely tomorrow.

Major Market Correlations Between Yields, Stocks And USDollar 10 year US yields vs Dollar Index vs SP500
10 year US yields vs Dollar Index vs SP500

We talked about US yields and USD a few weeks back, but now also added SP500 to the chart, which can do well when fifth wave for US yeilds is done. DXY slowly coming into 105-106 area.

10 Year US Yields: Final Leg In A Bullish Sequence

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