Are the Emini and Bond markets correlated?
The answer is sometimes yes and sometimes no. Correlation between the two markets can go as high as +60% (correlated) or a low as -60% (negatively correlated). You can add the in-built TradeStation correlation indicator on a chart of SPY and TLT to see this for yourself. There are 2 opposing factors that drive the Bond and Stock markets at different times: • Interest rates might be falling and causing Bond prices to rise. The stock market might view the lower interest rates as encouraging for the economy and respond with higher stock prices. Alternatively, rising interest rates will cause Bond prices to fall and the stock market might view the tightening as negative for the economy and stock prices. In these cases correlation between the two markets is positive as they are moving in sync. • Stocks and Bonds are also alternative investment vehicles. If the stock market is rising strongly it might encourage Bond investors to cash out and put their money in the stock market and thereby ca
