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cross markets, familiar trading patterns for stocks, bonds and commodities that have held for months are starting to unravel as financial markets grapple with expectations that the U.S. economy will slide into a recession next year, market analysts told MarketWatch.
The S&P 500 index SPX, +0.75% saw its longest losing streak in nearly two months on Wednesday, even as long-term Treasury yields TMUBMUSD10Y, 3.478% continued to fall while crude oil prices fell to the lowest level this year.
For most of this year, falling Treasury yields coincided with higher equity valuations as borrowing costs became a critical concern for markets.
Now, it appears this dynamic is shifting, a sign that investors are starting to brace for a looming recession, even if the equity market hasn’t fully come around to this view.
“Copper prices are down, oil prices are down despite the fact that the inventory report came in lower than expected and China is reopening. The recession is weighing on everything,” said Gene Goldman, chief investment officer at Cetera Investment Management.
Crude oil prices traded in the U.S. CL00, 0.29% have fallen 10.5% so far this week to $71.59 a barrel, according to FactSet data. And while copper prices are up modestly in that time, they’re still down more than 13% so far this year. The yield on the 10-year Treasury note has fallen roughly 25 basis points since the start of December.
