The two‑month rolling correlation between the S&P 500 and the 10‑year Treasury yield was -0.69 in 2026, the lowest reading since 1996, according to UBS. That level indicates that stocks and bonds are moving together more often than they have in three decades.

Historically, the inverse relationship between equities and Treasuries provided a buffer when stocks declined, a dynamic that underpinned many investment products and shaped portfolio allocations for two decades. The correlation began to weaken around 2020 and has remained negative through 2026, a shift driven by rising inflation volatility rather than a single change in inflation levels.

The 30‑year Treasury yield rose above 5% for the first time since 2007 and hovered near 5.1% as of July 16. A $25 billion auction of new 30‑year bonds cleared above 5% earlier in the year, the first such sale in 18 years. US fiscal deficits are projected to widen from about 5.8% of GDP in 2026 to 6.7% by 2036, with net interest payments increasing as a share of the economy.

Foreign demand for US debt has thinned. Japanese investors sold $29.6 billion of US government, agency and local authority debt in the first quarter of 2026, the largest net sale since 2022, as domestic yields became more attractive. Japan’s 10‑year yield rose above levels last seen in 1997, and Germany’s 10‑year Bund reached 15‑year highs, reflecting a broader withdrawal of global demand.

Investors have shifted toward short‑dated, low‑duration assets such as cash and bills, which carry minimal interest‑rate risk. The sell‑off in the long end of the curve has raised yields and tightened liquidity, supporting the dollar while pressuring assets that rely on duration.

Bitcoin has become as sensitive to macro conditions as the dollar and gold. Its price tends to rise when real yields fall, the dollar weakens, or financial conditions ease. A rally in Treasuries that lowers yields can therefore support Bitcoin, whereas a sustained rise in yields compresses the equity risk premium and raises the opportunity cost of holding a non‑yielding asset.

Societe Generale research suggests that a 10‑year yield around 4.5% marks a threshold where the relationship between yields and equities turns hostile. Below that level, rising yields and rising stocks can coexist; above it, higher yields tend to drag equities down. Goldman Sachs reached a similar conclusion, noting that the rise in yields has compressed the equity risk premium to a level where investors receive limited compensation for bearing stock risk.

Regulators in Washington have struggled to sustain a bid for Bitcoin this year, as macro‑driven yield pressure outweighs crypto‑specific developments.

The current environment removes a traditional floor beneath risk assets. If inflation volatility subsides and growth risk becomes the dominant market driver again, the historic inverse correlation may re‑emerge, potentially restoring a safe haven for equities and reducing Bitcoin’s exposure to Treasury yield movements.