Big Tech and Interest Rates Are Starting to Move in Unison Again
- Correlation builds between Nasdaq 100 and 10-year yield
- Tech acting like an inflation hedge, not rates-sensitive asset
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Gone are the days where rising yields spooked Big Tech. Now, they climb together.
Today’s Chart of the Day looks at the 40-day correlation between the Nasdaq 100 Index and 10-year Treasury yields, illustrating a stark trend reversal from a year ago when the two moved in opposite directions. For most of 2021, higher yields were pricing in an economic recovery, inflation and tighter monetary policy. So as they increased it triggered selloffs in long-duration assets like shares of Apple Inc. or Microsoft Corp., growth stocks whose values are based on future prospects and whose haven-like qualities come from enormous cash reserves that would be worth less as inflation moves higher.